MTN share price hurt by full-year loss warning

Johannesburg - Shares of South Africa’s second biggest mobile network by subscribers, MTN  [JSE:MTN], fell over 3% in Johannesburg on Wednesday as the company warned of financial losses for the full year ended December 31 2016.

“MTN expects to report a loss in basic headline earnings per share (HEPS) and basic earnings per share (EPS) for FY2016,” the company said in a statement to shareholders.

Nigeria is still proving to be a headache for MTN as the company blamed its poor performance on a regulatory fine in that country.

Last year, MTN agreed to pay 330 billion naira ($1.7 billion) in cash to the Nigerian government for failing to disconnect just over 5 million unregistered SIM cards in that country.

MTN also committed to listing in Nigeria as part of the settlement deal.

“The Nigerian regulatory fine is expected to have an estimated negative impact of approximately 474 cents on HEPS and EPS, respectively,” said MTN.

MTN’s share price at 10:21 in Johannesburg was down over 3% to R114 in trade amid the announcement.

Struggling operations

MTN added that its first half performance in Nigeria was hit by the disconnection of 4.5 million subscribers in February 2016, in compliance with the Nigerian Communications Commission (NCC) subscriber registration requirements.

“The withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the Naira against the USD also negatively impacted MTN Nigeria’s performance," said the company.

“Consolidated results in Rand terms from Nigeria were affected by the weaker Naira in the second half of the year,” said MTN.

MTN said that in the prior full-year period, it reported HEPS of 1 204 cents and EPS of 746 cents.

The mobile network said other contributing factors to the negative HEPS and EPS for FY2016 were “foreign exchange losses in a number of operations, losses from joint ventures and associates, additional depreciation resulting from prior hyperinflation adjustments in MTN Irancell ,the Zakhele Futhi tax and share-based payment charges and professional fees incurred in respect of the settlement of the Nigeria regulatory fine and planned listing”.

The company further warned of “disappointing results” from its South African unit in the first half of its financial year largely owing to a “poor postpaid performance”.

MTN plans to release its full-year results on March 2.

MTN has over 200 million subscribers across Africa and the Middle East, but the company is the second biggest network in South Africa behind Vodacom.