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MTN considers higher full-year dividend if conditions improve

Johannesburg - MTN will consider raising its full-year dividend above forecasts if trading conditions improve after the settlement of a record fine in Nigeria led to the first-ever half-year loss at Africa’s biggest mobile-phone operator.

The wireless carrier will pay an interim dividend of R2.50, it said in its first-half earnings statement on Friday. It will consider a higher full-year pay-out than the forecast R7-a-share “if operating conditions improve materially,” it said.

The company made a provision for the full 330 billion naira (R14.216bn) fine imposed by the Nigerian government in its first-half results, drawing a line under the 10-month saga that’s wiped almost a third off the share price. The so-called headline loss-per-share, which excludes one-time items, was R2.71.

The shares fell 2.1% to R130.70 as of 09:55, valuing the company at R241bn. The stock is down about 30% since the Nigerian fine was levied in October.

“They are doing a strategic review of the business, as I think they should,” said Peter Takaendesa, a senior analyst at Mergence Investment. “They know that they are losing market share in some of the countries that they are operating in. The encouraging thing is that the company might be moving into a new era, with new management. Unfortunately this could take up to 12 months.”

MTN subscriber numbers were flat at 232.6 million subscribers at the end of June, when compared with the end of 2015. The company reduced its full year guidance for additional customers to 8.1 million from 12 million.

"MTN continued to operate in a challenging environment for the six months ended 30 June 2016. The financial performance for the period reflects the confluence of a number of material issues, which created the 'perfect storm'," it said. "The group has made strides towards resolving these challenges although many of these factors fall outside of its control."

On 10 June MTN Nigeria resolved this matter with the Federal Government of Nigeria (FGN) and agreed to pay the FGN a total cash amount of 330 billion Nigerian naira (R22.93bn) over three years in a full and final settlement.

"Apart from the Nigerian regulatory fine, the depreciation of local currencies against the US dollar had a substantial impact on the group’s results," it said.

"The group’s underlying performance was impacted by weak macro-economic conditions affecting consumer spending, the withdrawal of regulatory services in MTN Nigeria from July 2015 until May 2016 and disconnections of subscribers related to subscriber registration requirements, mainly in Nigeria," it said.

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