Fitch Ratings has revised the Outlook on MTN Group’s debt ratings to Negative from Stable and affirmed the IDR at ‘BBB’.

The Negative Outlook reflects the risk of a significant cash outflow due to a substantial fine imposed on MTN’s Nigerian operations to the tune of N1.04 trillion, which could increase leverage and pressure MTN’s credit metrics.

Fitch said that it understands that management remains in discussion with NCC as to the size and timing of the payment of the fine. If the fine is confirmed as initially announced by the group and is payable in the short term, it could result in negative rating action.

In MTN’s 3Q15 results call, management highlighted the difficulties the group faces in remitting dividends from MTN Nigeria to the parent company. This is due to the Nigerian central bank’s policy of maintaining the Naira peg to the US dollar, which is limiting foreign exchange liquidity.

The liquidity squeeze arising from this has been short term. However, if there is no evidence of an improvement in liquidity from the Nigerian operations, it will result in negative rating pressure.

With strong growth in recent years, Nigeria now accounts for a larger proportion of MTN’s profits. MTN Nigeria accounts for almost half of the group’s EBITDA, and a greater proportion of its free cash flow. The fine in Nigeria underlines some of the wider risks associated with emerging markets from macroeconomic risks such as currency volatility to industry specific regulatory developments.

However, a significant reduction in dividends would be needed to offset a loss of dividends from Nigeria to ensure MTN’s ability to service the debt at a holding company would be unimpaired.