The Johannesburg Stock
Exchange launched Friday an investigation into mobile giant MTN for
"possible insider trading" before the South African company announced
it had been hit by a US$5.2 billion fine in Nigeria. The Nigerian
Communications Commission (NCC) fined Africa's largest telecoms firm for
missing a deadline to deactivate 5.1 million unregistered SIM cards.
News
of the fine broke Monday morning in Nigeria, sparking a sell-off of MTN shares
before the company formally notified shareholders later in the day.
"The
market regulation team is looking into trades that took place before the
announcement in order to determine if there is any evidence of possible insider
trading," Peter Redman, Johannesburg Stock Exchange (JSE) market
regulation advisor, said in a statement.
South
African law dictates that companies are to immediately warn shareholders about
price-sensitive information.
AFP report continues:
"The
investigation will follow due process to establish whether there have been any
breaches of the listings requirements and can be lengthy process," said
Andre Visser, JSE regulation manager.
MTN
issued a statement saying "senior management of the company and its
advisors are currently engaging with the JSE Limited on the timing of the...
announcement."
The
probe could result in South Africa's bourse operator slapping MTN with another
hefty fine or result in criminal charges.
"It
just puts the company under additional pressure," said Amy Cameron,
telecoms analyst at BMI Research, a market research firm based in London.
"It will be another really big challenge."
Cameron
said that MTN should brace itself for a rocky few months.
"It
could look into some sort of international arbitration, because a 5.2 billion
dollar fine is absolutely crippling," she said.
Early
in August the NCC issued a directive to mobile telecoms companies operating in
Nigeria to deactivate all unregistered SIM cards within seven days or face
sanctions.
The
penalty saw the company's shares crash on the JSE and raised questions about
the renewal of its licence in Nigeria next year if the fine goes unpaid.
The
NCC has set a November 16 deadline for MTN to pay the fine.
MTN had more than 62.8
million subscribers in Nigeria -- its biggest market -- in the second quarter
of this year.
Embattled MTN Faces Legal Probe Over
Insider Trading
On
Friday the Johannesburg Stock Exchange (JSE) launched an investigation into
telecommunications giant MTN over alleged insider training, according to a
statement by the JSE’s regulation manager Andre Visser.
It
will be recalled that SaharaReporters obtained a confidential document from the
offices of the Nigerian Communications Commission(NCC) which portrayed MTN
Nigeria as a serial offender regulations and explained how the staggering fine
of $5.2 billion was levied against them.
On
Monday MTN’s stock was sold-off at an extremely high rate. However, the
company did not notify its shareholders of the fine until later on in the day.
South African financial law stipulates that companies notify their
shareholders about any price-sensitive information immediately.
The
fact that MTN notified their shareholders so late tipped off regulatory
agencies and investigators to the possibility that insider trading occurred.
If
the probe proves that insider trading did occur, MTN could face yet another
fine from the South African bourse operator or even criminal charges. “It just
puts the company under additional pressure,” said Amy Cameron, a telecoms
analyst at BMI Research when speaking to Vanguard Newspaper, “It will be
another really big challenge.”
The
South African investigation coincides with the announcement by the NCC that it
has given MTN until November 17 to pay its US$5.2 billion fine. According
to a statement issued by the NCC spokesperson the outcome of the JSE probe
could impact the deadline to pay the fine.
Currently
the NCC is in talks with MTN’s CEO, the senior management in Nigeria, the JSE,
the office of the Nigerian President, and Nigeria’s internal security agencies.
Thus far, no official statement of any of these parties has been issued
regarding the outcome of the talks.
- SaharaReporters 
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