By Chijioke Ohuocha

LAGOS (Reuters) - MTN did not break Nigeria's currency transfer rules, the South African telecoms firm said on Friday, denying allegations it illegally repatriated $14 billion in a row analysts say exposes the inherent risk of investing in frontier markets.

Nigeria's upper house of parliament last month agreed to investigate whether Africa's biggest telecoms company unlawfully repatriated $13.92 billion between 2006 and 2016.

On Thursday, a committee of Nigerian lawmakers summoned MTN <MTNJ.J>, Nigerian trade minister Okechukwu Elenemah and four banks for an "investigate hearing" into the claims.

The crux of the allegation is that MTN did not obtain certificates declaring it had invested foreign currency in Nigeria within a 24 hour deadline stipulated in a 1995 law, and so the repatriation of returns on those investments was illegal.

Nigeria is MTN's most lucrative market out of the 22 countries the company operates in across Africa, Asia and the Middle East but it is becoming increasingly problematic.

MTN runs Nigeria's largest mobile phone network which generates a third of the company's revenue.

The fund transfer issue has battered MTN's shares, which were near a 6-1/2 year low at 105.91 rand on Friday.

Ferdi Moolman, chief executive of MTN Nigeria, said in a statement on Friday that when banks issued "certificates of capital importation (CCI)" for funds it brought into Nigeria after the deadline they had done so with central bank approval.

"Often for various reasons such as not having all the required documentation, for instance, it is not possible to issue a CCI within 24 hours, and the Central Bank of Nigeria's Forex Manual contemplates such situations by asking that the banks refer to the CBN for approval," Moolman said.

"As such, the CBN has the authority, and indeed we believe, approved the banks' applications to issue CCIs outside the recommended time frame," he said.

The motion initially put forward by Nigerian Senator Dino Melaye claims MTN requested the certificates at least five years after bringing in the hard currency.

SECOND DISPUTE

The row comes as Africa's biggest economy struggles with its first recession in a generation and dollar shortages due to low oil prices and is the second major dispute between the South African telecoms firm and Nigeria.

Earlier this year, MTN agreed to pay a greatly reduced fine of 330 billion naira ($1.1 billion) to end a long running dispute over unregistered SIM cards in Nigeria.

Analysts said the latest saga showed the risks inherent in frontier markets but said international investors find it difficult to ignore Nigeria because of the size of its market.

As part of the settlement to end the SIM card dispute MTN agreed to list its local unit on the Nigerian Stock Exchange.

"Ultimately, MTN Nigeria has to become less foreign and more Nigerian if it is to stay in Nigeria over the long run," Guy Zibi, principal at U.S.-based telecom advisory firm Xalam Analytics.

"MTN's strategy served them extremely well but it was always a risky strategy, and they are merely seeing the downside of it albeit in somewhat extreme fashion," Zibi said.

Rafiu Ibrahim, chairman of Nigeria's senate investigative panel on the alleged illegal fund repatriation, said on Wednesday that a team of international and local accountancy experts and lawyers had been assembled to look into the matter.

(Editing by David Clarke)