Nigeria fine results in MTN headline loss

Shares in cellphone giant fall to their lowest level since December

MTN Group expects to report a full-year loss due to a $1 billion (R134bn) regulatory fine in Nigeria and underperformance there and at home, it said yesterday, sending its shares to a two-month low.

Africa’s most populous nation and biggest economy Nigeria is MTN’s most lucrative but increasingly-problematic market, hobbling its growth outlook.

But the appointment of banker Rob Shuter, who starts next month, as chief executive is expected to bring operational strength and step up Africa’s biggest telecoms company’s hunt for returns, possibly in financial services.

“We hope that this new CEO with a stability mentality will be able to stabilise MTN and not venture into all these risky operations,” said Momentum SP Reid analyst Sibonginkosi Nyanga.

MTN, which makes a third of its revenue in Nigeria, said it expects a headline loss and will issue a further trading statement on the likely range of its loss. Eight analysts expected the company to post a 39% fall in headline earnings per share to 455 cents.

MTN agreed in June to pay Nigeria a 330 billion naira fine for missing a deadline to cut off unregistered SIM cards from its network. The fine, which was originally set at $5.2 billion, shaved off 474 cents per share from headline earnings per share, a primary profit gauge that strips out certain one-off items.

In the mix of paying the fine, MTN is being investigated by Nigerian lawmakers for illegally repatriating $14 billion between 2006 and 2016, the second major dispute analysts have said exposes the risk of investing in frontier markets.

Shares in MTN, which fell more than 4% when the market opened, were 2.18% lower at R115.16 at 10.43am, the lowest level since December.

Underlying operational results for full-year 2016 were also affected by fees incurred for a planned listing in Nigeria and underperformance of its unit there and in South Africa in the first half of last year.

MTN said it aims to list its Nigerian operations on the local bourse this year, subject to market conditions.

However, the unit has been battered by the weak economy, depreciation of the naira and the disconnection of 4.5 million subscribers in February last year. – Reuters

PICTURE: AP BAD SIGN: MTN agreed in June to pay Nigeria a hefty fine for missing a deadline to cut off unregistered SIM cards from its network. Coupled with a underperformance at home, the company is expected to report a full-year loss.