MTN tum­bles on R7.5bn ‘typo’

Huge num­ber of shares swap hands af­ter an­nounce­ment of a 35% re­duc­tion in Nige­rian fine. It turns out the fine was re­duced by 25%

CityPress - - Busi­ness - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­

Be­lea­guered mo­bile gi­ant MTN gave share­hold­ers a bit of shock treat­ment this week by first an­nounc­ing that its mas­sive fine in Nige­ria had been re­duced by 35% – and then an­nounc­ing the next day that the re­duc­tion was ac­tu­ally only 25%.

The dif­fer­ence is R7.5 bil­lion, and enor­mous num­bers of MTN shares swapped hands on Thurs­day based on the in­cor­rect in­for­ma­tion that day.

Nige­rian Com­mu­ni­ca­tions Com­mis­sion spokesper­son Tony Ojobo sub­se­quently con­firmed to Bloomberg that it had made a “typo” in its ini­tial let­ter to MTN.

The cor­rec­tion on Fri­day led to an­other drop in the share price af­ter many share­hold­ers had taken po­si­tions based on what seemed like the fi­nal out­come of the fine saga. The share fell by 6% but re­cov­ered some­what to close 3% lower, at R135.54 a share.

Be­fore the fine, the com­pany’s shares had been trad­ing at R190 each.

The com­mis­sion had ap­par­ently sent a first let­ter on Wed­nes­day con­firm­ing a 35% re­duc­tion, then a sec­ond one on Thurs­day evening with the cor­rected fig­ure, the com­pany said in an early an­nounce­ment be­fore the JSE opened on Fri­day.

The com­pany is al­ready fac­ing a JSE probe into the way it ini­tially an­nounced the fine – rel­a­tively late in the morn­ing on a Mon­day af­ter the news broke in Nige­ria the pre­vi­ous evening.

The fear is that the rel­a­tively tardy an­nounce­ment of the fine on the JSE’s news ser­vice al­lowed a win­dow for in­sider trad­ing.

This week’s back and forth would prob­a­bly be open to even more scru­tiny.

The in­cor­rect an­nounce­ment sparked mas­sive trad­ing in the com­pany’s shares, with 15 mil­lion of them chang­ing hands – the largest daily amount of trad­ing since the week the fine was orig­i­nally an­nounced.

The orig­i­nal fine was for 1 tril­lion naira, worth about R75 bil­lion.

It stems from MTN not dis­con­nect­ing 5.1 mil­lion un­reg­is­tered SIM cards on its net­work in ac­cor­dance with the Nige­rian equiv­a­lent of South Africa’s Reg­u­la­tion of In­ter­cep­tion of Com­mu­ni­ca­tions and Pro­vi­sion of Com­mu­ni­ca­tionRe­lated In­for­ma­tion Act, pop­u­larly known as Rica.

The first an­nounce­ment this week said that the com­mis­sion would cut its fine by 35% if MTN paid up be­fore the end of the year – in ef­fect a de­mand for R49 bil­lion in a month.

That is more than half the group’s cash and cash equiv­a­lents, which stood at R87 bil­lion at the end of June, and just slightly less than a year’s worth of rev­enue from MTN’s Nige­rian op­er­a­tions.

The sec­ond ad­just­ment to the fine on Fri­day morn­ing amounts to R7.5 bil­lion on top of that.

“Nei­ther the first nor the sec­ond let­ter sets out any de­tails on how the re­duc­tion was de­ter­mined,” said MTN.

The group im­plied that it did not nec­es­sar­ily ac­cept the new re­duced fine, whether it fell by 35% or 25%.

“All fac­tors hav­ing a bear­ing on the sit­u­a­tion will be thor­oughly and care­fully con­sid­ered be­fore the com­pany ar­rives at a fi­nal de­ci­sion,” it said.

MTN chair­per­son Phuthuma Nh­leko would “re-en­gage” with the com­mis­sion, ac­cord­ing to the com­pany’s state­ment this week.

Nh­leko is mean­while en­trench­ing his re­newed con­trol at the com­pany he once ran. MTN this week an­nounced a ver­i­ta­ble purge of its man­age­ment fol­low­ing the res­ig­na­tion with lit­tle no­tice of CEO Si­fiso Dabengwa last month.

Nh­leko has been hold­ing the reins since then, and is now ap­par­ently re­vers­ing changes made at MTN since he gave up the CEO po­si­tion back in 2011.

The com­pany’s struc­ture is go­ing to be re­turned to where it was when Nh­leko left, with the cur­rent four di­vi­sions re­struc­tured into three re­gional struc­tures: west and cen­tral Africa, Mid­dle East and north Africa, and south­ern and east Africa.

This in­volves the res­ig­na­tion of MTN Nige­ria’s CEO, Michael Ikpoki, and head of reg­u­la­tory af­fairs Ak­in­wale Good­luck.

South African Ferdi Mool­man is be­ing pro­moted from fi­nan­cial chief to CEO in Nige­ria, while MTN’s head of hu­man re­sources in the coun­try, Amina Oyag­bola, will take over gov­ern­ment re­la­tions.

MTN has also cre­ated the new man­age­ment po­si­tion of group chief op­er­at­ing of­fi­cer – who will re­port di­rectly to Nh­leko. Jy­oti De­sai, pre­vi­ously tech­nol­ogy head at MTN Nige­ria and op­er­a­tions of­fi­cer at MTN Iran­cell, started work­ing in this new po­si­tion on Tues­day.

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