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MTN settles Nigeria dispute, looks at local listing

Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – MTN Group has agreed to pay a reduced fine of 330 billion naira ($1.7 billion) in a settlement with the Nigerian government of a long-running dispute over unregistered SIM cards, sending shares in the South African telecoms group soaring.

The settlement clears the way for MTN to list its local unit on the Nigerian Stock Exchange. Such a step had been on the firm’s radar but plans accelerated during negotiations over the fine, Executive Chairman Phuthuma Nhleko told Reuters.

The fine will be paid by MTN Nigeria over three years and is only around a third of the $5.2 billion figure initially demanded by the west African country last October for failing to deactivate more than five million unregistered SIM cards.

Nigeria has been cracking down on unregistered SIM cards, concerned they are used for criminal activity in a country fighting an insurgency by Islamist militant group Boko Haram.

MTN had threatened to pull out of Nigeria as paying the fine in full would have crippled its local operations, a government official said, asking not to be named.

“The present administration does not want to ground the operations of any investor in Nigeria,” he said.

Nigeria, Africa’s largest economy and most populous nation, faces its worst crisis for decades after the sharp fall in oil prices and last year’s introduction of a currency peg that put investors to flight.

But in a possible complication, Nigeria’s House of Representatives said it was surprised by the deal as its own probe into the MTN fine had not been concluded.

In March, the lower house launched an investigation, arguing that reducing the initial fine of $5.2 billion would require changing the law.

“We are still continuing with our investigation,” Fijabi Akinade, chairman of the House’s committee on communications, told Reuters. Lawmakers had summoned the communications minister and a top regulator official to discuss the deal on Monday.

“We want to know how they arrived at that decision and if it was done in good faith … But honestly, we are surprised,” Akinade told Reuters.

The dispute removed a cloud hanging over MTN and its shares surged more than 20 percent at one point and closed 13.18 percent higher at 140 rand. They had shed 22 percent since the fine was first announced.

“The relationship between MTN, the Federal Government of Nigeria and the Nigerian Communication Commission (NCC) has been restored and strengthened,” Nhleko said.

The Nigerian regulator said the settlement was acceptable to both parties and that it had not been “out to kill MTN”.

“Money was not the issue here. The breach was the issue. I believe MTN has learned its lesson,” NCC spokesman Tony Ojobo told Reuters.

 

MAJOR MARKET

MTN is the largest mobile phone operator in Nigeria with 62 million subscribers and the west African nation accounts for about one third of its revenues.

Nhleko, who was chief executive for nine years until 2011, was appointed on an interim basis for six months in November but has stayed on as the company negotiated with Nigerian authorities.

In February, MTN hired Eric Holder, the former U.S. attorney-general, to help negotiate the fine.

MTN, Africa’s largest telecoms company, has already paid 50 billion of the 330 billion naira owed. The rest will be paid in six instalments over three years, the company said.

Five weeks after the fine was first announced, MTN’s chief executive Sifiso Dabengwa resigned and the company asked Nhleko to take the reins temporarily.

A Johannesburg-based analyst gave Nhleko credit for not settling the fine earlier at a figure of $3.9 billion, the first sign Nigerian authorities gave after months of talks that it was willing to accept a lower sum.

“He’s the guy who built this ship and this shows he can still steer the ship,” Momentum SP Reid Securities analyst Sibonginkosi Nyanga told Reuters.

The telecommunications firm which spans 20 countries, set aside $600 million in March to pay the fine.($1 = 198.0000 naira)

 

(By Zandi Shabalala and Camillus Eboh. Additional reporting by Alexis Akwagyiram and Camillus Eboh in Lagos; Editing by Keith Weir and Mark Potter)

 

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South Africa’s Telkom agrees performance-based pay deal with unions

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African fixed line telecoms network operator Telkom has reached a performance-based pay deal with two of it three largest labour unions while agreeing not to cut jobs for two years, the company said on Tuesday.

Telkom, reported a 15 percent rise in full-year profits on Monday after completing a three-year restructuring as it adapts the business to slowing revenue from fixed-line telephony and a sharp increase in data traffic.

The firm said on Tuesday it had signed a deal with Solidarity and the South African Communications Union to implement a performance-based remuneration scheme for both individual employees and teams. A third union, the Communications Workers Union, has agreed in principle, Telkom said.

“The agreement covers Telkom’s 11,000 unionised employees, out of a total headcount of just over 13,500 at the end of March 2016,” Telkom said in a statement.

As part of the deal, Telkom committed to no compulsory job cuts for the next two years and limiting outsourcing moves to less than 1,000 employees over the same period.

Telkom, in which the government owns a stake of about 40 percent, said it would not be offering any employee an annual increase in pay this year but was willing to pay workers more if they reached certain targets.

“The company is offering employees the opportunity to earn up to 12 percent more each month should they meet and exceed sales and customer service targets,” Telkom said.

 

(Reporting by TJ Strydom; Editing by James Macharia, Greg Mahlich)

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OPEC fails to agree policy but Saudis pledge no shocks

Comments (0) Business, Latest Updates from Reuters, Middle East

VIENNA (Reuters) – Saudi Arabia promised on Thursday not to flood the oil market with extra barrels even as OPEC failed to agree on output policy, with Iran insisting on the right to raise production steeply.

Tensions between the Sunni-led kingdom and the Shi’ite Islamic Republic have been the highlights of several previous OPEC meetings, including in December 2015 when the group failed to agree on a formal output target for the first time in years.

Tensions were less acute on Thursday as Saudi Arabia’s new energy minister, Khalid al-Falih, showed Riyadh wanted to be more conciliatory and OPEC decided unanimously to appoint Nigeria’s Mohammed Barkindo as the group’s new secretary-general.

Several OPEC sources said Saudi Arabia and its Gulf allies had tried to propose a new collective ceiling in an attempt to repair OPEC’s waning importance and end a market-share battle that has sapped prices and cut investment.

But OPEC sources said the organisation had failed to agree on output policy and set a new ceiling.

Despite the setback, Saudi Arabia moved to soothe market fears that failure to reach any deal would prompt OPEC’s largest producer, already pumping near record highs, to raise production further to punish rivals and gain additional market share.

“We will be very gentle in our approach and make sure we don’t shock the market in any way,” Falih told reporters.

“There is no reason to expect that Saudi Arabia is going to go on a flooding campaign,” Falih said when asked whether Saudi Arabia could add more barrels to the market.

The market has grown increasingly used to OPEC clashes over the past two years as political foes Riyadh and Tehran fight proxy wars in Syria and Yemen.

Saudi Arabia effectively scuppered plans for a global production freeze – aimed at stabilising oil markets – in April. It said then that it would join the deal, which would also have involved non-OPEC Russia, only if Iran agreed to freeze output.

Tehran has been the main stumbling block for the Organization of the Petroleum Exporting Countries to agree on output policy over the past year as the country boosted supplies despite calls from other members for a production freeze.

Tehran argues it should be allowed to raise production to levels seen before the imposition of now-ended Western sanctions over Iran’s nuclear programme.

Iranian Oil Minister Bijan Zanganeh said Tehran would not support any new collective output ceiling and wanted the debate to focus on individual country production quotas.

“Without country quotas, OPEC cannot control anything,” Zanganeh told reporters. He insisted Tehran deserved a quota – based on historic output levels – of 14.5 percent of OPEC’s overall production.

OPEC is pumping 32.5 million barrels per day (bpd), which would give Iran a quota of 4.7 million bpd – well above its current output of 3.8 million, according to Tehran’s estimates, and 3.5 million, based on market estimates.

 

POLITICAL TENSIONS

That “OPEC could not agree on a relatively benign deal which would have been constructive for price is a sign that political differences are undermining the organisation”, said Gary Ross, founder of U.S.-based PIRA consultancy.

“It is bearish short-term for oil prices. But what is also important is that Saudis are not planning to flood the market and want higher prices,” he added.

Falih was the first OPEC minister to arrive in Vienna this week, signalling he takes the organisation seriously despite fears among fellow members that Riyadh is no longer keen to have OPEC set output.

“There could be shorter-term situations in which, in our view, OPEC might intervene and yet other situations — such as long-term growth of marginal barrels — in which case it should not,” Falih told Argus Media ahead of the meeting.

At its previous meeting in December 2015, OPEC effectively allowed its 13 members to pump at will.

As a result, prices crashed to $27 per barrel in January, their lowest in over a decade, but have since recovered to around $50 due to global supply outages.

Until December 2015, OPEC had a ceiling of 30 million bpd – in place since December 2011, although it effectively abandoned individual production quotas years ago.

For a Take-a-Look on Reuters stories on OPEC, click on

 

(By Reem Shamseddine, Rania El Gamal and Alex Lawler. Additional reporting by ⁠⁠⁠⁠Shadia Nasralla⁠⁠⁠⁠⁠; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

 

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Bidvest foods spin-off Bidcorp valued at $5 bil in market debut

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Bidvest listed its food services business as Bid Corporation (Bidcorp) on the Johannesburg Securities Exchange on Monday, with the shares opening trade at 270 rand to value the company at around 90 billion rand ($5 billion).

Bidcorp, which supplies pubs, restaurants and hotels in Europe, South America and Asia, is the largest primary listing on the JSE since Vodacom in 2009, the stock exchange said.

Bidvest, whose business also spans pharmaceuticals, car showrooms and shipping, announced in February it planned to spin off and separately list its food business, its biggest division, in South Africa. It had previously said the business should be separated because its value was not reflected in the company’s share price.

Plans to list the food business in London were abandoned in 2014 and private equity buyout bids for it were rejected three years earlier

The separation will position the food business for a new phase of both internal and acquisitive growth, said Bidcorp Chief Executive Bernard Berson before he opened trading in Johannesburg by blowing a ceremonial kudu horn.

Bidvest shares dropped 68 percent as Bidcorp started trading, settling around 118.42 rand by 1213 GMT to value what remains of Bidvest at around 38 billion rand, while Bidcorp had risen to 280.84 rand.

The listing splits the group into what is more or less a South African corporation in Bidvest and global food player in Bidcorp, Cratos Capital senior trader Ron Klipin told Reuters.

“It’s certainly unlocking some short-term value for Bidvest shareholders,” said Avior Capital Market analyst Mark Hodgson.

($1 = 15.7968 rand)

 

(Reporting by Zimasa Mpemnyama and TJ Strydom; Editing by Greg Mahlich)

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South Africa’s AMCU union launches strike at Sibanye’s Kroondal mine

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Workers began an indefinite strike at Sibanye Gold’s Kroondal platinum mine in South Africa on Friday to demand transport because they were being attacked after working night shifts, their union said.

“The company doesn’t want to provide transport for its employees and these are basic conditions of employment,” Joseph Mathunjwa, president of South Africa’s Association of Mineworkers and Construction Union (AMCU) told Reuters.

AMCU is the main union at the Kroondal mine located in the Rustenburg platinum belt and has about 7,000 workers.

Sibanye’s spokesman James Wellsted said the gold and platinum producer would seek a court order to stop the strike because it was negatively affecting output.

“With metal prices being low for AMCU to now go on strike over issues that are being dealt with is irresponsible. This poses a threat of to the viability of the mine,” he said.

AMCU led a record and sometimes violent five-month wage strike at three major platinum producers in 2014.

Unions and platinum companies are expected to start wage talks in the next few weeks.

Sibanye acquired the Kroondal mine when it bought Aquarius Platinum in October last year for $295 million.

 

 

(Reporting by Zandi Shabalala; Editing by James Macharia)

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ArcelorMittal South Africa says Saldanha steel plant will keep operating

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – ArcelorMittal South Africa’s Saldanha plant will keep operating, its chairman said on Wednesday, after the facility was placed under review earlier this year due to low steel prices and rising costs.

The plant, north of Cape Town is the newest in the company’s fleet and was opened in 1998 to focus specifically on steel exports, but low steel prices and high electricity and transport costs made it unprofitable last year.

“As the board, we are comfortable that we will have a Saldanha that is a good, healthy, performing business for a long period,” said ArcelorMittal South Africa Chairman Mpho Makwana.

The weaker rand and a pickup in West African steel demand have since ensured the plant’s viability, said acting Chief Executive Dean Subramanian.

South Africa’s currency lost about a quarter of its value from end of May last year until now, providing relief to some of the nation’s exporters.

Subramanian and Makwana were speaking at the release of report on ArcelorMittal’s contribution to South Africa’s economy, which also stated that the plant was responsible for 16 percent of the steel produced in Africa’s most industrialised country.

ArcelorMittal will start maintenance at Saldanha in August, which Subramanian said would increase the plant’s life by up to five years.

 

(Reporting by TJ Strydom; Editing by James Macharia)

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Carlyle sets up $500 mln Europe, N.Africa energy vehicle

Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Carlyle Group on Monday announced an investment in Tunisia-focused oil and gas explorer Mazarine Energy which will also receive $500 million to make bolt-on acquisitions in Europe and North Africa.

The deal is the first investment in over a year for Carlyle International Energy Partners, the private equity firm’s overseas oil and gas investment fund, which has more than $2.5 billion at its disposal, CIEP head Marcel van Poecke said.

The size of the investment in Mazarine was not disclosed.

Private equity funds including Carlyle, Riverstone and CVC Partners have built up significant firepower in recent years to invest in the oil and gas sector which has struggled following the collapse in oil prices since mid-2014.

“I think we will see more deals this year. Very slowly the M&A (merger and acquisition) space is starting to pick up,” van Poecke told Reuters.

Mazarine will seek investments in “low cost, low-risk opportunities” in onshore exploration and production assets, Chairman and founder Edward van Kersbergen told Reuters.

The company will focus on onshore fields in Romania, where CIEP acquired assets in March 2015 from Sterling Resources, as well as North Africa.

“We want resources that we can develop in a relatively short space of time at a low technical cost,” van Kersbergen said.

In Tunisia, Mazarine expects to start production of 1,500 to 2,000 barrels per day next year, according to van Kersbergen.

CIEP has in recent years created two companies to invest in assets in the North Sea and the Indian subcontinent.

Neptune, the North Sea vehicle set up by CIEP and CVC Partners a year ago which is headed by former Centrica boss Sam Laidlaw, was expected to make an investment over the next 12 months, van Poecke said.

 

 

(Reporting by Ron Bousso; editing by Jason Neely and David Evans)

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Miner Lonmin reports core profit after cost savings

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By Barbara Lewis and Mamidipudi Soumithri

LONDON/BENGALURU (Reuters) – South Africa-focused platinum producer Lonmin reported a core profit on Monday after cost savings, and said it expected firm chemical and car industry demand for the rest of the year despite the Volkswagen diesel emissions scandal.

Its shares rose more than 14 percent in early trading, outperforming the wider mining sector, which was around 2 percent higher.

Lonmin’s shares have lost around 90 percent of their value over the last year, hit by a strike, rising costs and plunging platinum prices. In December, the company raised $400 million from selling new shares.

In its first-half results statement, Lonmin said it had cut losses per share to 1.8 cents from a loss of 164.6 cents the same time a year ago, and reported a core profit of $36 million versus a loss of $6 million in the first half of 2015.

Cost-cutting is ahead of schedule, with close to 70 percent of the full-year target of savings of 700 million rand ($45 million) already achieved.

Net cash improved to $114 million at the end of March, compared with $185 million net debt at the end of September.

CEO Ben Magara said in a conference call he did not anticipate further job cuts at current market conditions, but added conditions may change.

Volkswagen’s admission last year that it cheated U.S. diesel emissions tests could, analysts have warned, hit sales of diesel cars, which need platinum for catalytic converters.

But Lonmin predicted emerging markets would spur demand as they seek to catch up with the “ever tightening emission standards of developed markets”.

It also said it saw firm chemical industry demand, while the jewellery market could remain static during the year.

($1 = 15.5008 rand)

(Editing by Adrian Croft and Mark Potter)

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In race to catch up, Rwanda risks property bubble

Comments (0) Africa, Business, Latest Updates from Reuters

KIGALI (Reuters) – When property consultant Simon Ethangatta set up in Rwanda’s capital in 2011, the view from his office was of tin shacks overlooked by modest suburban homes on the wooded hillsides.

Now, some of the slums have made way for mirror-glass office blocks while smart houses spring up beyond in Kigali districts which were once littered with corpses during the 1994 genocide.

“It’s changing so fast,” said Ethangatta, a Kenyan. “These guys are so ambitious.”

To the government, this is proof of Rwanda’s dramatic recovery in the two decades since 800,000 ethnic Tutsis and moderate Hutus were butchered by Hutu extremists.

But the pace of change – part of a ‘Vision 2020’ plan to turn one of world’s poorest states into a middle-income country by the end of the decade – is starting to reveal the risks of going too far, too fast.

As imports are sucked into a nation dependent on farming, foreign aid and modest mineral exports, the Rwandan currency has fallen, some banks are turning cautious on property lending and economic growth – while still strong – has slipped.

All this is threatening to take the shine off President Paul Kagame, a former rebel who masterminded the revival but has drawn criticism from Rwanda’s tiny domestic opposition as well as foreign governments for changing the constitution. This could allow Kagame, who has already effectively run the country for more than 20 years, to stay in power until 2034.

“If people start to question whether he can deliver, there will be trouble,” said one Kigali-based diplomat.

 

APPETITE FOR IMPORTS

The authorities dismiss such worries and point to the record of change. In the last decade, the economy grew at an average rate of 8 percent a year, one of the fastest in Africa.

This week, hundreds of foreign visitors are attending the World Economic Forum on Africa in Kigali, where four international hotels – two Hiltons, a Marriott and a Radisson – will open in the next three months.

Hundreds of new homes are coming on the market worth $500,000 each – a huge sum for a country where most of the 11 million population are subsistence farmers and the per capita income is just $730, far short of the $1,045 that the World Bank defines as middle income.

The appetite for cars, household appliances and smart phones from an emerging middle-class is adding to the import bill, just as mineral exports have been hit by a downturn in global commodity prices, shrinking dollar income.

Rwanda’s franc weakened 11 percent against the dollar in 2015 and the central bank expects a further 8 percent drop this year. Foreign currency reserves are under pressure, with one diplomat saying they were worryingly low and sufficient to pay for just 3.2 months of imports. The central bank does not publish timely reserve figures.

“Rebuilding reserve buffers will be critical to enhance the country’s resilience to future shocks,” the International Monetary Fund wrote in January.

In a report in April, it said growth remained robust at 6.9 percent in 2015 but cited a “significant loss” of commodity export revenues among challenges facing the land-locked country.

Rapid growth in commercial credit, much of it to fund housing and construction, has also raised fears of a bubble.

Central Bank Governor John Rwangombwa told Reuters he was watching lending levels for signs of overheating.

“For now we don’t see any big challenge because the performance of these loans is still fair,” he said, adding that non-performing loans – where borrowers are significantly behind with repayments – stood at 6.2 percent of total lending in December, a slight decrease from 2013.

 

TIGHT CONTROL

But if a bubble were to burst, this could shake the social compact of rising living standards that has maintained Kagame’s grip on power since his rebel army marched into Kigali in 1994.

Diplomats said a referendum vote last year that approved the constitutional change was pushed through with limited debate and the government offers too little room for opposition.

“It’s a very tightly controlled regime. Anybody steps out of line, it’s prison – or worse,” another Western diplomat said. “The Kagame lustre has definitely worn thin.”

Two former senior military officers have been sentenced to up to 21 years in jail on charges of inciting the public to cause an insurrection and links with exiled critics of the president.

Rwanda has denied any involvement in attacks on exiles, including a former spy chief who was killed in 2014 in South Africa, but have called them traitors who should expect no forgiveness or pity.

Kagame himself points out that the constitutional change won 98 percent backing in the referendum.

“If some people seek to stay in power when their people don’t want them – and it has happened, I’ve seen it in Africa – that will always end in a disaster,” he said earlier this year. “Is it the same case with Rwanda? I’m telling you no.”

While the nation still depends on aid for about 40 percent of its annual budget, officials say the economy remains on track.

Credit handed out by Rwandan banks, led by Bank of Kigali, the largest domestic lender, rose 26 percent year-on-year in December, much of it in the form of mortgages.

Some people are less sanguine than Rwangombwa about the rise in mortgages, which estate agents say typically charge a hefty 17 percent annual interest and usually account for 70 percent of a property’s value.

The Independent, a weekly business magazine, reported that 100 small hotels closed last year after failing to repay bank loans. Some bankers have grown wary of bricks and mortar.

“We are being very careful about lending to the construction sector,” one senior executive at a foreign-owned bank said, asking not to be named for fear of offending the government.

 

(By Ed Cropley. Editing by Edmund Blair and David Stamp)

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Kenya’s Equity Group rules out acquisitions for now

Comments (0) Africa, Business, Latest Updates from Reuters

By Duncan Miriri

NAIROBI (Reuters) – Kenya’s Equity Group Holdings, the country’s second largest bank by assets, reported a 19 percent rise in first-quarter pretax profit and said growth would come from expanding its subsidiaries rather than new acquisitions.

The failure of three small and mid-sized banks in Kenya in the past year has fueled talk of consolidation, with Equity’s rival Kenya Commercial Bank planning to buy one of the institutions now under administration.

But Equity Group Chief Executive James Mwangi said he would focus on expanding his bank’s existing subsidiaries in the region. After acquiring a lender in the Democratic Republic of Congo, Equity has already added a dozen new branches.

“We will focus on these subsidiaries and make them substantial actors in the markets they are in,” he told an investor briefing.

Alongside Congo, his bank also has units in Uganda, Rwanda, Tanzania and South Sudan.

Equity reported a pretax profit for the first quarter of 2016 of 7.3 billion shillings ($72.71 million), as it secured cheaper funds from shareholders and creditors while increasing lending to customers.

The bank increased its borrowed funds by 76 percent to 46.0 billion shillings. The extra funds came with an interest rate of Libor plus one, or about 4 percent, and was lent to customers at prevailing double-digit rates, he said.

Net loans increased by 22 percent from the same period last year to 275.0 billion shillings. Total costs grew 17 percent during the period as staff costs and loan loss provisions rose.

Non-performing loans stood at 3.8 percent of the total, below the 8 percent recorded for the industry in March.

($1 = 100.4000 Kenyan shillings)

(Reporting by Duncan Miriri; Editing by Edmund Blair and Louise Heavens)

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