Nigeria’s tax reset complicates MTN Group’s long-planned share sell-down

MTN Group’s long-discussed plan to reduce its shareholding in MTN Nigeria is no longer on an immediate timeline. While the Nigerian unit has returned to profitability and resumed dividend payments,  shifting tax dynamics have complicated the path to a public sell-down.

Speaking during the company’s Q3 2025 earnings call in November, MTN Group president and CEO Ralph Mupita suggested that recent changes to Nigeria’s capital gains tax (CGT) regime have made a near-term reduction in the Group’s stake commercially unattractive. As a result, plans to dilute ownership in favour of local investors are effectively on pause.

“That has been complicated by the changes in the tax code,” Mupita said, according to transcripts released in December. “There have been some changes to CGT; right now, it is not something that we are pushing at. We kind of pulled back and are holding back. We didn’t put a hard timeline on ourselves, but with the developments on the tax codes, it’s made it a bit unattractive for us to do it right now, so we’re kind of paused on that initiative, primarily driven by the changes in the tax code on capital gains.”

The pause marks a shift from the telco giant’s long-stated plan to deepen local ownership of its Nigerian business once it returned to profitability. While the company has cleared key financial hurdles, the higher CGT rate has altered the economics of large share sales, reinforcing investor concerns that the new tax regime could slow major capital market transactions.

MTN Group did respond to a request for comments at the time of publication.

As part of recent tax reforms, Nigeria raised capital gains tax for companies from 10% to 30%, increasing the cost of large equity transactions. CGT applies to profits realised from the sale of shares and other equity securities and was raised to curb tax arbitrage between trading income and chargeable gains.

For CGT to apply, share transactions must exceed ₦150million ($105,763.40), with gains above ₦10million ($7,050.89).

The tax shift comes at a time when MTN Nigeria has returned to profitability and resumed dividend payments, clearing key conditions that previously delayed the sell-down. The Nigerian unit posted a ₦750.19 billion ($528.95 million) profit for the nine months ending September 2025, from a ₦514.9 billion ($363.05 million) loss in the same period last year, and declared an interim dividend of ₦5 per share.

MTN Nigeria’s shares were trading at ₦573.90 per share as of Monday, January 12, 2026. MTN Group is expected to receive a gross dividend of about 975 million rand ($59.19 million) from its Nigerian subsidiary.

MTN Group has long said it intends to deepen local ownership of its Nigerian business. In April 2025, Mupita reiterated plans to cut the Group’s stake once MTN Nigeria resolved its negative equity position and resumed dividend payments. That commitment forms part of MTN’s localisation agreements with the Nigerian government following its 2016 settlement over unregistered SIM cards.

“The only localisation we have as MTN Group is we have a potential sell-down in Nigeria at some point in time, approximately 11%,” Mupitan said at the time. “This is something we have said long ago, that over time we would want more Nigerians owning the company, and we are prepared to sell down to 65%. We are at around 76%.”

The proposed transaction would mark MTN’s second major retail public offering in Nigeria, following its 2021 sale of MTN Nigeria shares to local investors. That offer was oversubscribed, with 661.25 million shares allocated, including a 15% greenshoe option, reducing MTN Group’s stake to 75.6% from 78.8%. More than 126,000 investors participated, including Nigerian pension funds representing approximately 6.5 million contributors.

Market analysts emphasise that the higher rate has made transactions of this scale more expensive. Nigeria’s CGT rate exceeds those of several peer markets, including the United States (21%), South Africa (21.6%), and Kenya (15%).

In November 2025, Nigerian equities lost ₦6.54 trillion ($4.61 billion) in value, the steepest monthly decline since 2020, as investors reacted to the planned implementation of the new CGT regime in January 2026.

Under the new law, gains from share sales are taxed at 30%, regardless of holding period, compared with the previous framework that allowed short-term trades to be taxed at 10% as trading income. For instance, a stock bought at ₦600 and sold at ₦1,000 within a month would have attracted a 10% trading gain. Now, it is a fixed 30% on the gain, changing trading economics completely.

According to Mustapha Umaru, an industry and equity research analyst at CSL Stockbrokers Limited, a Lagos-based investment company, the higher CGT rate is particularly significant for transactions such as MTN’s proposed sell-down.

“In MTN’s case, an 11% sell-down in MTN Nigeria is a very large transaction,” he said. “Once you apply CGT at that rate, the premium becomes significant.”

Umaru added that foreign portfolio investors were the first to pull back towards the end of 2025. “There is still a wait-and-see attitude in the market,” he said. “People want to see how the law plays out in practice before committing fresh capital.”

He expects this attitude to wane as the law’s implementation gets clearer.

While the new CGT regime has unsettled markets, the government maintains that the reforms will strengthen Nigeria’s capital market over the long term, with plans to reduce the rate to 25% soon.

Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, said in November that the new framework improves clarity and fairness for investors.

“The reform makes investment in the Nigerian capital market more attractive, reduces investment risk, and ensures fair treatment of legitimate costs incurred by investors,” he said. “In essence, the reform promotes equity and confidence in the market – not the reverse.”

For companies like MTN, however, timing remains the immediate concern—whether to wait for clarity and softer rates or absorb higher costs in a market still adjusting to the tax reset.