MTN earnings fall 20% amid Nigeria woes

2016-02-19 06:48 - Loni Prinsloo
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MTN has received a $5.2bn fine in its biggest market Nigeria. (Bloomberg)


Johannesburg - MTN [JSE:MTN] said 2015 earnings fell at least 20% due to a a loss of business in Nigeria, where regulators withheld services and forced the company to cut off 5.1 million customers.

Basic earnings per share excluding one-time items were at least R3.07 lower than the R15.36 reported in 2014, MTN said in a statement after the market closed on Thursday.

The Nigerian Communications Commission ordered MTN to disconnect subscribers that weren’t registered as part of an effort to tighten security in a country fighting an Islamist insurgency.

The row in Nigeria could cost MTN more.

The company is locked in discussions with the government over a proposed $3.9bn fine imposed after the wireless operator missed a deadline to disconnect the unregistered subscribers. A Lagos court last month adjourned a hearing called by MTN so the two sides could reach a settlement.

“There remains some uncertainty” surrounding the outcome of the talks, MTN said. The penalty was reduced from an original $5.2bn in December.

Fighting crime

Security agencies in Nigeria, battling insurgents from Islamist group Boko Haram, have sought to cut off service to unregistered users as they fight crime in a country with poor identity records.

“Negotiations around the Nigerian fine continue, and we expect MTN to reach a settlement well below the NCC’s last offer of $3.9bn,” Avior Capital Markets analyst David Lerche said in a note to clients.

MTN shares gained 1.1% to R153.70 at the close in Johannesburg, a fifth consecutive day of rises, valuing the company at R284bn. The stock is still 19% down since the fine imposed by the Nigerian Communications Authority was first made public on October 26.

Nigeria is MTN’s biggest market with 63 million customers. The company has a total of 233 million subscribers across Africa and the Middle East.

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