MTN shares fall on expectation of full-year loss

Telecommunications group MTN’s share price on the JSE fell by more than 6% on Wednesday morning after it announced it expects to report a headline loss a share and basic loss a share for the year ended December 31, as a result of a fine imposed on its MTN Nigeria business.

The Nigerian Communications Commission (NCC) in October 2015 fined MTN $5.2-billion over its failure to deactivate 5.2-million unregistered cellphone SIM cards by August 2015. After months of negotiations with the Nigerian authorities, MTN agreed to pay a reduced $1.67-billion fine in tranches over three years.

The Nigerian regulatory fine is expected to have an estimated negative impact of 474c on MTN’s headline earnings per share (HEPS) and earnings per share (EPS) for 2016.

MTN had posted HEPS and EPS of 1 204c and 746c respectively, for 2015.

The telecommunications group said foreign exchange losses in a number of operations; losses from joint ventures and associates; additional depreciation resulting from prior hyperinflation adjustments in MTN Irancell; the Zakhele Futhi tax and share-based payment charges; and professional fees incurred in respect of the settlement of the Nigeria regulatory fine and planned listing on the Nigerian Stock Exchange, also negatively impacted on HEPS and EPS for the full year.

The results are further expected to be negatively impacted by the underperformance of MTN Nigeria and MTN South Africa in the first half of 2016. MTN Nigeria’s first-half performance was impacted by the disconnection of 4.5-million subscribers in February 2016, in compliance with the NCC subscriber registration requirements.

The withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the naira against the dollar also negatively impacted MTN Nigeria’s performance.

Consolidated results in rand terms from Nigeria were affected by the weaker naira in the second half of the year. The disappointing results from MTN South Africa in the first six months, were largely owing to the poor postpaid performance.