MTN Scraps Early Debt Payment Amid Currency Shortage - Business -

MTN Group Limited has abandoned plans to repay early, about $500 million of debt held in Nigeria, saying it can’t get hold of dollars in the African wireless carrier’s biggest market. “We had looked to do the early resettlement but currently we are not able to,” Nik Kershaw, Head of Investor Relations, told Bloomberg on phone monday. “In Nigeria there is limited availability of the hard currency.” MTN, which has more than 230 million mobile-phone customers in 22 countries, said August 5 it was in talks with Nigeria’s Central Bank about the early repayment of borrowings to reduce exposure to the naira, which has weakened against the US dollar this year. According to Bloomberg, the Johannesburg-based company sees the naira deteriorating further, Kershaw said. Declines in emerging market currencies against the dollar, including the South African rand, will hurt the business, Kershaw said. The cost of importing handsets into South Africa could rise, for example, with the difference to be passed onto the consumer. “If the handset pricing goes up because the currency weakens, it’s going to cost the consumer more,” Kershaw said. The rand tumbled to a record low yesterday on concern global commodity prices will worsen the country’s economic outlook. The currency traded two per cent weaker at 13.2340 against the dollar as of 12:54 p.m. in Johannesburg. MTN shares declined 4.9 per cent to 168.50 rand, compared with a 2.5 per cent fall on the FTSE/JSE Africa Top 40 Index. MTN will take time to consider how to respond to the rand’s weakness in terms of cost controls and investment plans, Kershaw said. “When we do the next budget cycle we’ll review that. We’re not going to have a short-term, knee jerk reaction to the currency moving, you need to see how things play out over the next couple of months,” he said.