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MTN settles Nigeria dispute, looks at local listing

10 June 2016 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.

 

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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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Mozambique president dismisses finance minister

10 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

MAPUTO (Reuters) – Mozambique President Filipe Nyusi on Thursday fired Finance Minister Adriano Maleiane, who has been embroiled in more than two weeks of negotiations with Russia’s VTB Bank over a late $178 million loan repayment.

A statement from Nyusi’s office gave no reason for the dismissal and did not say who would be replacing Maleiane.

Mozambique Asset Management (MAM) borrowed $535 million from VTB to build shipyards in the capital Maputo and the northern town of Pemba in expectation of a rapid takeoff in the offshore gas sector but missed a May 23 deadline for its first loan repayment.

Restructuring the loan, updating business plans and bringing strategic partners on board were all possible ways to avoid a default on the debt, Maleiane said on Wednesday.

Delays to gas projects and at least $1.35 billion of secret government borrowing have created a foreign debt burden that threatens to plunge one of the world’s poorest countries into economic crisis.

Financial watchdogs from Switzerland and Britain are investigating Credit Suisse and VTB Bank for arranging the heavy undisclosed sovereign borrowing.

 

(Reporting by Manuel Mucari; Writing by Ed Cropley and Ed Stoddard; Editing by Andrew Roche)

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Kenya’s Safaricom to launch local rival to Uber

9 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s biggest telecoms company Safaricom is joining up with a local software firm to launch a ride-hailing company to take on Uber [UBER.UL] as it seeks new sources of revenue, its chief executive said.

Safaricom, which is 40 percent owned by Britain’s Vodafone, and Nairobi-based software developer Craft Silicon will launch the app called Littlecabs in the next three weeks, Safaricom CEO Bob Collymore told Reuters in an interview.

“It is effectively a rival for Uber,” he said. “It is a local competitor which will be cheaper and better for the local community.”

Uber operates in several African countries, including Kenya where it launched in early 2015, drawing customers by offering lower prices and cutting out haggling over fares. But regular taxi drivers have complained about its impact on business.

In March, the Kenyan authorities charged six men with attempted murder and malicious damage to property over an attack on an Uber taxi driver in February. [nL5N1713UX]

Safaricom will help develop the application, offer the network connectivity, put Wi-Fi in vehicles that will be signed up on Littlecabs, and use its mobile-phone based financial service M-Pesa to process payments, Collymore said.

Safaricom remains focused on its core businesses of offering calls, texts, Internet access and M-pesa but Collymore said it was seeking new sources of revenue.

“The direction of the company is to become a platform,” he said, citing partnerships with local banks that use M-pesa to lend money on mobile phones.

Safaricom has had a three-year partnership with M-Kopa, a company that connects customers to solar electricity, and is about to invest in a firm involved in education and another that helps jobseekers, Collymore said.

“When M-Pesa was launched it wasn’t launched as a big thing. It was just launched as a thing that was right in the edge. Now it is 20 percent of (Safaricom’s) revenue,” he said.

Littlecabs is unlikely to grow to that level but would offer a new revenue source and develop skills in the local community, he said.

Safaricom expects its earnings to rise in the financial year to next March on the back of increased data usage driven by the youth segment and higher sales of smart phones. [nL5N188101]

Revenue from calls rose 4 percent in the financial year ending March 2016, bucking the trend in other markets where voice revenues are falling.

Collymore said political protests, which have led to clashes between demonstrators and police, could dampen the outlook.

“It is not a question of who is right and who is wrong; these pictures are not helpful for investments,” he said.

 

(By Duncan Miriri. Editing by Edmund Blair and Susan Fenton)

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Kenyan finance minister raises budget deficit forecast

9 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

NAIROBI (Reuters) – Kenya is aiming for a budget deficit of 9.3 percent of GDP in fiscal year 2016/17 and plans to borrow 150 billion shillings ($1.48 billion) from external sources, probably by selling international bonds, officials said on Wednesday.

Finance Minister Henry Rotich said in a budget speech the deficit would be 691.5 billion shillings ($6.9 billion).

Kamau Thuge, the principal secretary at the ministry of finance, later told Reuters that figure would be equivalent to 9.3 percent of GDP.

Rotich gave the 150 billion shilling borrowing figure at a post-budget news conference. “We are still looking at accessing capital markets by way of sovereign bonds, we are looking at export credit arrangements and also bilateral and syndicated loans,” he said.

In April the finance ministry said the actual deficit in fiscal year 2016/17, which starts on July 1, would probably be around 6.9 percent of GDP, because ministries often struggle to spend their allocations.

“The failure to consolidate the fiscal balance any faster will be of some concern to markets,” Standard Chartered economist Razia Khan said. “Kenya’s accumulation of external debt has outpaced its ability to generate faster export growth to repay this debt.”

But Rotich said Kenya’s public debt “remains sustainable”, with the net present value of public debt to GDP below 50 percent and posing a “low risk of debt distress” based on assessments by the government, World Bank and International Monetary Fund.

“We remain committed to bringing the fiscal deficit down gradually to below 4 percent of GDP in the medium term,” he added. In the 2015/16 fiscal year ending this month, the forecast deficit was 8.7 percent of GDP, but has since been revised down.

“Our target to generate 1 million new jobs remains,” Rotich said, adding that he expected the economy to grow 6 percent in calendar year 2016 and by 7 percent in the medium term, compared with 5.6 percent growth last year.

The minister also outlined measures to boost revenue collection, including the potential introduction of a presumptive tax for those in the informal sector, who usually fall under the radar of the revenue authority.

“If everybody paid their fair share of taxes we would be in a better position to lower tax rates,” Rotich told lawmakers.

Thuge told Reuters local borrowing would remain nearly constant at 3 percent of GDP, ensuring local interest rates would not be under pressure.

 

($1 = 101.0000 Kenyan shillings)

 

(Reporting by Duncan Miriri. Editing by Elias Biryabarema and Catherine Evans)

 

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Rwanda says eyeing $200 mln worth of short-term facility from IMF

9 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

KIGALI (Reuters) – Rwanda said on Wednesday it had asked the International Monetary Fund to offer it a short term facility worth $200 million to help fend off foreign exchange risks in case the country’s reserves dwindled.

The central African state has previously said it had approached the IMF for help but had not revealed the amount involved.

“The IMF facility is actually to help us not going into problems and that facility is $200 million,” Finance Minister Claver Gatere said at a post-budget press briefing in the capital Kigali.

Gatere said Rwandan authorities expected the IMF to announce a decision on their request “tonight” (Wednesday).

In the budget speech, Gatere said Rwanda’s overall expenditure in 2016/17 fiscal year would rise to 1.95 trillion francs ($2.60 billion) from 1.81 trillion francs in the year ending this June.

 

(Reporting by Clement Uwiringiyimana; editing by Elias Biryabarema/Mark Heinrich)

 

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South Africa’s Transnet transports monthly record of manganese

8 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Transnet Freight Rail moved a record number of manganese shipments in May due to new trains and improved market conditions, the company said on Wednesday.

Transnet Freight moved 1.053 million tons in May from a previous high of 976,671 tons in October 2015.

“The record-breaking performance is due to a significant improvement in efficiencies across the channels which were driven by the introduction of new locomotives among other things,” Transnet Freight Rail said in a statement.

State-owned Transnet plans to spend up to 390 billion rand ($26 billion) over ten years to expand and revamp railways, pipelines and ports in Africa’s most advanced economy, which is struggling with flagging growth.

More than 75 percent of the new locomotive railway fleet is used to move manganese, used as a component to keep steel from rusting. The company also moves coal, chrome and iron ore.

The company also said there was “an upturn in market conditions”. A company spokesman said the company able to move more volumes from mining companies.

($1 = 14.9650 rand)

 

(Reporting by Zandi Shabalala, editing by Louise Heavens)

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South Africa’s rand halts rally, GDP data, Fitch review keep market wary

8 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – The rand pulled back from the previous session’s four-week highs against the dollar on Wednesday and traders said South African GDP data expected to show a small contraction in the first quarter could add pressure on the currency.

The rand has gained as much as 5 percent against the dollar since Friday, reaching 14.7995 on Tuesday in a relief rally prompted by S&P’s decision to maintain South Africa’s investment grade BBB- rating.

The currency however gave back some of those gains on Wednesday to trade at 14.9175/dollar by 0650 GMT, down 0.1 percent from the previous session’s close.

Traders saw a risk to the currency from Statistics South Africa’s GDP data due out at 0930 GMT, with economists polled by Reuters expecting the economy to have shrunk 0.1 percent on a quarter-on-quarter annualised basis in the first three months of the year.

“If this is indeed the case there is not much chance the rand will be able to continue its journey lower (firmer),” Standard Bank trader Warrick Butler said in a note to clients.

Another rand-moving headline could be a review from Fitch, which is also expected to retain its own BBB- rating on Africa’s most industrialised economy, although it could change the outlook to negative from stable.

Fitch has not set a date for its announcement, but the Treasury has said it expects it on June 8.

In fixed income on Wednesday, the yield on debt maturing in 2026 was flat at 9.1 percent.

The JSE securities exchange’s Top-40 futures index was down 0.4 percent, pointing to a slightly weak start for the local bourse at 0700 GMT.

 

(Reporting by Stella Mapenzauswa; Editing by Ed Stoddard)

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

7 June 2016 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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Swiss and UK watchdogs quiz Credit Suisse over Mozambique loans

7 June 2016 Comments (0) Africa, Business

ZURICH (Reuters) – Switzerland’s financial watchdog said it is in touch with Credit Suisse over Mozambique’s undeclared loans, while Britain’s regulator is also making inquiries, according to a source familiar with the situation.

In April, Mozambique, one of the world’s poorest countries, disclosed as much as $1.35 billion of sovereign borrowing that may have made its debt unsustainable.

Swiss bank Credit Suisse and Russia’s VTB have been active in Mozambique, arranging loans for state-owned firms as well as helping with a eurobond issue.

A spokesman for Swiss financial watchdog FINMA told Reuters on Tuesday it was in contact with Credit Suisse over its engagement with the sub-Saharan African nation.

“We are aware of the issue and are in contact with the bank over this matter,” he said on Tuesday, declining to give any further details.

Separately, a source told Reuters on Monday that the UK’s Financial Conduct Authority (FCA), was looking into the role both Credit Suisse and VTB played.

Credit Suisse declined comment.

VTB said it had been open and transparent with the regulator on the Mozambique transaction and was not aware of any investigations.

“As we previously said, the total public debt number disclosed in the prospectus of the issued sovereign eurobond was inclusive of all outstanding direct and publicly guaranteed government debt, as confirmed to us by Ministry of Finance of Mozambique,” the Russian bank said.

Mozambique’s foreign debt – including $2 billion of commercial borrowing arranged without consulting parliament as required – has ballooned in the last four years, largely due to expectations it was set to become a major natural gas producer.

However, those expectations are now being shown to be wildly premature, leaving the country with a foreign debt burden equal to $400 per head – only a fraction below the International Monetary Fund’s $435 annual per capita GDP estimate.

 

(Reporting by Joshua Franklin and Oliver Hirt in Zurich, Alexander Winning in Moscow and Ed Cropley in Luanda; Editing by Michael Shields and Alexander Smith)

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Kenya’s tourism earnings fall 3 pct in 2015

7 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s revenue from its tourism sector dropped 2.87 percent last year to 84.6 billion shillings ($837.21 million), its tourism minister said.

Visitor numbers and earnings have plunged in the past four years as al Shabaab militants from neighbouring Somalia launched attacks on Kenyan soil in retaliation for Kenya’s military intervention.

Showing the depth of the fall, tourist arrivals fell from 1.8 million in 2011 to 1.18 million last year. The country earned 98.9 billion shillings in 2011 compared with the 84.6 billion shillings last year.

Najib Balala said the sector was on course for a recovery in 2018, in line with government plans, but cautioned that violent protests against the country’s electoral body could curb arrivals.

“A lot of people I meet are saying Kenya is maturing but when they see the incidents of the last weeks, they say we are going backwards,” he told Reuters on Monday.

“My concern is that, the efforts and the road map is working very well, I don’t want the political noise to interrupt that programme.”

Tourism is one of the main hard currency earners for Kenya.

President Uhuru Kenyatta’s government wants to bring in 3 million visitors a year according to its manifesto when it was elected in early 2013.

Efforts to revive the sector include boosting security, opening new source markets such as Nigeria and Poland and increased budgetary allocations to the sector.

Visitors are expected to rise by a third this year to 1.6 million and to recover to 1.8 million in 2018, matching a record high set in 2011.

($1 = 101.0500 Kenyan shillings)

 

(Reporting by John Ndiso; Writing by Duncan Miriri; Editing by Alison Williams)

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