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Johannesburg - The huge losses in the share price of MTN [JSE:MTN], which led to the JSE temporarily suspending trade in the share on Monday, came to a halt on Tuesday morning.
Although the stock was again one of the busiest on the JSE, with almost 4.8 million shares being sold by midday, the share price gained 0.49% to R148.96. Before Tuesday it had lost more than 22% over the past seven days and on Monday it fell more than 8% shortly after the market opened.
The sharp drop was initiated by the news that the Nigerian telecommunication authorities slapped MTN with a fine of R71.1m for not cancelling more than 5 million unregistered SIM cards. The fine is payable by November 16.
There was not much else happening on the JSE on Tuesday morning and the major indices hardly moved by midday. At that stage the All-share index was 0.03% lower at 53 843 points and the Top 40 index had lost only 0.02% to 48 339 points.
At that stage the Industrial index was unchanged, the Financial index 0.25% down and the Resources index only 0.04% higher. The Gold index gained 1.63% after the metal ended a four-week losing streak as the market waits for Friday’s US labour market report.
Technical analysts warned that the local market is still overbought with the potential for further profit-taking.
Shareholders punished MTN for its inability to communicate properly on the Nigerian issue. One of the biggest shareholders, the Public Investment Corporation (PIC), said it is concerned that MTN did not anticipate or take steps to prevent being fined $5.2bn in Nigeria for failing to deregister the mobile phone subscribers.
The manager of most South African government employee pension funds said it is in talks with MTN’s management and “it will take all facts into consideration" before deciding on its next steps.
Sentiment towards MTN improved somewhat with news that the Nigerian Communications Commission has approved the renewal of MTN’s digital mobile licence, despite the fine. The licence that was issued in 2001 had an expiry date of February 2016, but that has now been extended to August 31 2021.
READ: Nigerian regulator extends MTN’s $94.2m licence
Imara SP Reid said on Tuesday morning in a note that one of the conditions of the renewal is fulfilment of all regulatory requirements, which means that the fine must be paid. MTN’s management said on Monday they are still in talks with the authorities about the fine.
Imara SP Reid said further they would not sell the share as the damage has been priced in with a market capitalisation loss at a similar level to that of the $5.2bn fine. The analysts think upside share price movement is likely on any positive news.
The other share in the news is SABMiller [JSE:SAB], which set yet another record as the company waits for Anheuser-Busch InBev’s final takeover offer. The final deadline for the offer is Wednesday, after the British authorities extended it by a week. By midday the share was another 0.52% higher at R854.00.
SABMiller’s share price has made steady progress over the last seven days and is now 12.83% higher; it has gained 28.5% over the last 30 days since the news about AB InBev’s interest in the company became known.
Some of the other big double-listed shares were the victim of profit-taking as analyst said the industrial sector is particularly overbought. Naspers [JSE:NPN] lost 0.44% to R2 054.99 and Steinhoff [JSE:SHF] traded 0.53% weaker at R84.85. Richemont [JSE:CFR] lost 0.08% to R118.64.
Mondi [JSE:MND], which set a new high of R321.99 on Monday, lost 0.10% to trade at R321.66 at midday.
Aspen [JSE:APN] however bucked the negative trend and gained 3.21% by midday to trade at R318.30. Sasol [JSE:SOL] was also 1.03% stronger at R451.62.
Lonmin [JSE:LON], which wrote down half of its asset value because of the poor platinum price, was the strongest performer on Tuesday morning. The share gained 8.74% to trade at R5.60 at midday. The share price lost 12.7% over the previous seven days and is 77.3% weaker over the past 90 days.
