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MTN shares nosedive on profit warning

Johannesburg - Nigeria’s mega fine on mobile network MTN [JSE:MTN] is still weighing on the company as it warned of forthcoming losses on Tuesday.

MTN told shareholders on Tuesday that it “expects to report negative basic headline earnings per share (HEPS) and basic earnings per share (EPS)” for the six months ended June 30.

For the previous comparable period, MTN reported HEPS of 654 cents and EPS of 653 cents.

The fall in earnings comes amid MTN having agreed to pay a 330 billion naira (R24.94bn) fine to the Nigerian government for its failure to register five million subscribers.

Amid the warning on Tuesday, MTN shares fell over 2% to R137.80 at 09:49 in Johannesburg.

“The expected decline in the HEPS and EPS is primarily as a result of the Regulatory fine imposed on MTN Nigeria (‘the Nigerian regulatory fine’) following a resolution with the Federal Government of Nigeria on 10 June 2016,” said MTN.

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

MTN further said that it’s been hit by “foreign exchange losses in a number of operations, losses from joint ventures and associates and hyperinflation adjustments on MTN Irancell”.

Meanwhile, under-performances in MTN’s Nigeria and South African markets are also set to weigh down Africa’s biggest mobile network.

“MTN Nigeria’s performance was impacted by the disconnection of 4.5 million subscribers in February 2016, the final batch of subscribers to be disconnected in compliance with the Nigerian Communications Commission subscriber registration requirements,” said MTN.

“The withdrawal of regulatory services which was re-instated on 15 March 2016 with approval for promotions and price plans granted in early May 2016 also negatively impacted MTN Nigeria’s performance,” added MTN.

Regarding its South African operations, MTN said a “decline in the Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin, impacted by the marked increase in handsets sold during HY2016”.


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