Not a happy year for MTN
MTN SHARES wobbled nearly 2 percent yesterday after the telecommunications giant recorded its first ever loss last year, following its woes in Nigeria and a subdued market in South Africa.
MTN said it expected to post a loss for the year ended December as the full impact of the regulatory fine imposed by Nigerian authorities two years ago and the under-performance of its South African business came to haunt it.
“The Nigerian regulatory fine is expected to have an estimated negative impact of approximately 474 cents on headline earnings per share (HEPS) and earnings per share (EPS), respectively,” the company said. It expected a loss in its basic HEPS and basic EPS for the year compared to 1 204c and of 746c reported respectively during the corresponding period last year.
The stock dropped 1.7 percent on the JSE to close at R115.75 yesterday.
MTN said it was still waiting to assess the full impact of its woes for the year. “A further trading update will be issued once the company obtains a reasonable degree of certainty as to the likely range within which the HEPS and EPS are expected to be finalised.”
While MTN’s Nigerian hiccups contributed to most of its expected loss in profits, it did not find the going easy even in its home market in South Africa either, with the company reporting that it had performed poorly in the first half of last year as a result of what it called “poor postpaid performance”.
Other factors the company said affected its performance adversely were foreign exchange losses, the Zakhele Futhi tax, losses from joint ventures and the planned listing in Nigeria.
Last year, MTN eventually agreed to settle the Nigerian fine after eight months of negotiations. The penalty, reduced from an original $5.2 billion, was levied for missing a deadline to disconnect 5.1 million unregistered customers. The company said it would list in Nigeria as part of its settlement and appointed Citigroup and Standard Bank to advise it on the listing.
But the fine might not be the last the company has to contend with, after the Nigerian Senate last year initiated investigations on allegations the company had repatriated more than $13bn out of the country over a 10-year period – a charge the group has vehemently denied.
MTN is the largest mobile phone company in Nigeria and revenue from the country accounts for a third of the group’s total revenue.
The expected loss means the group’s incoming boss Rob Shuter will have his hands full in steadying the business when he resumes his duties next month.
Dobek Pater, a telecoms analyst at Africa Analysis, said while he expected Shuter to steer the company back to profitability, the Nigerian market would remain a challenging one to the company. “Nigeria remains a very competitive market with downward pressure on prices. Additionally, Airtel Nigeria may be sold in the near future and it will depend who acquires this operation and the strategy that will be pursued by the new market entrant,” Pater said.