Things looking up
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.