Is MTN losing control of key markets?

Johannesburg- Africa's biggest mobile phone operator MTN has lost control of key markets, claimed a shareholder after the group reported its first-ever half-yearly loss.

MTN cut investor payouts by almost 50% after taking a hit from a hefty regulatory fine in Nigeria for missing a deadline to cut off unregistered SIM cards from its network.

MTN said the fine, a third of the proposed initial penalty, wiped $768m - 474 cents per share - from headline earnings in the first six months of the year.

MTN had in any case been struggling to accelerate subscriber and profit growth as years of price wars and regulatory pressure hit margins and weakening economies squeezed consumer income.

"What you have here is a company that was gung-ho about Africa, where the operating environment has become difficult but they have shot themselves in both feet by losing control of the key markets and not paying attention to regulators," said one MTN shareholder, who declined to be named.

MTN, held by many investors for its dividend flows, will pay out 250 cents per share for the first half of the year, down nearly 50% on a year earlier.

However, the company said full-year dividend could top the previously forecast 700 cents per share if operating conditions materially improve.

Into the red

The headline loss came in at R4.9bn, or 271 cents per share, in the six months. This is compared with headline earnings of almost R12bn, or 654 cents per share, a year earlier.

MTN also said the results were affected by unfavourable currency swings, underperformance in its home market and in Nigeria, where it had to cut off another 4.5 million SIM cards to comply with local registration requirements.

Nigeria has been trying to halt the use of unregistered cards over concerns they are being used for criminal activity, including by Islamist militant group Boko Haram.

Shares in MTN, which had dropped by nearly one-third since October when Nigeria imposed the fine, see-sawed as investors digested the earnings statement.