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Johannesburg - MTN Group [JSE:MTN], Africa’s largest phone company, had its credit rating cut by Moody’s Investors Service because of the uncertainty regarding a $3.9bn fine in Nigeria, its largest market.
The rating was lowered to Baa3 from Baa2, Ivan Palacios, an analyst at Moody’s in Madrid, said in an emailed statement on Tuesday. The outlook is negative, signalling further rate cuts are possible. Fitch cut MTN’s rating one level to BBB- last week because of risks in Nigeria and South Africa. The outlook remains stable at Fitch. The company has a BBB- rating at Standard & Poor’s.
The change reflects “the increased operational and sovereign risks from one of its key markets, Nigeria”, Palacios said. “The outlook could be stabilised if matters surrounding the Nigerian fine are clarified and resolved with limited or manageable implications to MTN’s Nigerian and group operations as well as to their credit and liquidity profiles.”
Nigeria’s telecommunications regulator has fined MTN $3.9bn for failing to switch off unregistered mobile phone customers, which was revised down from an original penalty of $5.2bn.
MTN Group chairperson Phuthuma Nhleko has been running the company and leading talks over the fine with Nigeria’s authorities since CEO Sifiso Dabengwa resigned last month. The company’s value has dropped by about a quarter since the penalty was announced in October and is heading for its first year of losses since 2008.
