MTN share price takes dip

MTN’s share price slumped about 7% in early trade on Wednesday after the mobile network operator warned it would report its first full-year loss.

The group blamed the multibillion-rand fine imposed by Nigerian legislators for flouting customer registration rules, losses from joint ventures and associates and poor performance from its two biggest operations in Nigeria and SA.

MTN’s share price recovered to close 1.7% down at R115.75.

Mergence Investment Managers portfolio manager Peter Takaendesa said the market reaction suggested the trading update was marginally lower than market expectations.

MTN expects to report a loss in basic headline earnings per share and headline earnings per share for the 2016 financial year. In the 2015 financial year, MTN reported headline earnings per share of R12.04 and earnings per share of R7.46.

However, most of the items that have affected the results were non-recurring, said Takaendesa. The Nigeria fine was fully provided for in 2016 earnings as a largely noncash charge to the income statement and would not affect earnings going forward, but MTN would pay cash instalments over the next three years.

Bruce Main, a money manager at Ivy Asset Management, said MTN should be “paying attention to regions where they are actually profitable and so they have lost some market share”, he said. — BDLive