Things looking up

Finweek English Edition - - MARKETPLACE -

Af­ter al­most nine months MTN has come to an agree­ment with the Nige­rian reg­u­la­tors on its ini­tial $5.2bn fine. Now it only has to pay $1.671bn at cur­rent ex­change rates. This is good news for the com­pany for a num­ber of rea­sons. Firstly, this fi­nally closes the door on its big­gest dis­as­ter to date; sec­ondly, the fine is around a third of the ini­tial pro­posed fig­ure and thirdly, MTN gets to pay it off over three years. Thus, the tele­coms com­pany will be able to pay the fine out of cash flows (the last re­sults showed that cash flow from oper­a­tions was al­most dou­ble the fine amount) with­out re­sort­ing to debt or se­vere cuts to div­i­dends. MTN also promised to list its Nige­rian oper­a­tions on the Nige­rian Stock Ex­change, stat­ing that it will “al­ways en­sure full com­pli­ance with its li­cense terms and con­di­tions”. The stock ral­lied hard on the news, clos­ing up some 13% at R140 on the day, but it re­mains well down on the R190 level from the day the news of the fine broke last year. I will not be rush­ing back into the stock – while the com­pany prom­ises com­pli­ance I re­main very scep­ti­cal of man­age­ment and its at­ti­tude to­wards reg­u­la­tion. Ideally I want a new CEO, who is not an in­sider, to take over.

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