SHARES in MTN jumped 9.2% to close at R122.99 on Friday, lifted by among other things news that the group is seeking an out-of-court settlement with the Nigerian Communications Commission (NCC).

The NCC fined MTN $5.2bn, later reduced to $3.9bn, for its failure to register subscribers as requested by the law.

But MTN challenged the penalty in court, as it believes the size of the fine and the way it was imposed were not in accordance with the commission’s powers under the Nigerian Communications Act.

On Friday, the Federal High Court in Lagos, Nigeria, adjourned the matter to enable the parties to settle.

If they are unable to reach a settlement, the matter will return to court in March.

Dobek Pater, MD of research group Africa Analysis, estimated that a fine between $1bn and $2bn could satisfy both parties.

MTN, which is led by executive chairman Phuthuma Nhleko, makes about 37% of its revenue from Nigeria, and the current fine equates to more than twice its annual average capital spending over the past five years.

Mr Nhleko was put in charge for up to six months in November to help steer the company through the crisis.

The fine has hit MTN’s share unit price and the CEO of its Nigerian operations Ferdi Moolman has also admitted the fine could bankrupt the company as it represented 95% of its annual turnover. Mr Moolman said MTN had learnt its lesson and would work to restore its relationship with the regulator, stakeholders and its customers.

Last week, MTN confirmed its Nigerian unit would report profits of about $955m.

Since the Nigerian fine was imposed, MTN has come under scrutiny in many markets in which it operates. Last week, the group’s unit in Cameroon, along with France’s Orange, was cited in a report by Cameroon’s National Anti-Corruption Commission for owing about $166m in unpaid taxes.

With Reuters