Strong indications have emerged that MTN Nigeria’s lingering fine settlement and the currency crisis in the country will affect the Group’s half-year profits.
MTN Group fell in Johannesburg trading, as Africa’s largest mobile-phone company said it expects to report a first-half loss after agreeing to pay a record fine in Nigeria, according to Bloomberg.
The company’s shares dropped 2.5 per cent to 138.13 rand by yesterday morning, after earlier slumping as much as 3.8 per cent, the most in three weeks on a closing basis.
The N330 billion ($1.18 billion) settlement in Nigeria, announced last June, will reduce earnings per share for the six months through June by R4.74, while foreign-exchange losses, joint ventures and adjustments for inflation in Iran will further hurt results, MTN said in a statement yesterday.
According to Bloomberg data, MTN is set to report first loss-per-share for a sixmonth period in at least 20 years.
MTN is seeking to turn the page on a dispute with the Nigerian government, which initially imposed a $5.2 billion fine after the company missed a deadline to disconnect unregistered users.
Johannesburg-based MTN is overhauling senior management and has added new directors, as it seeks to convince investors the penalty won’t be repeated and revive a share price that’s 36 per cent lower than a year ago.
Earnings were also dampened by underperformance in MTN’s two largest markets, it said.
Nigerian results were further weighed on by government- mandated subscriber disconnections and a temporary withdrawal of regulatory services, while profit margins in South Africa were narrowed by an increase in handset sales.
The loss would be the first over any half-year period for at least 20 years, data compiled by Bloomberg show.
MTN, which reported earnings per share of 6.53 rand for the same period a year earlier, said it would issue a further statement once it is ready to provide more details about the projected loss. The final results will be announced on August 5.
It would be recalled that after nearly six months of negotiation and re-negotiation over the N1.04 trillion fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC) last year, the fine was finally reduced to N330 billion.
