MTN Shares have slumped more than 19 per cent on Friday morning after the company forecast a 2015 earnings drop of at least 20%. In a statement released by the company in Johannesburg, MTN said the expected fall in profit was due to under performance in Nigeria.
It said that the underperformance was because it faced a 3.9 billion dollars fine for failing to cut off more than five million SIM card users by the set date. Nigeria is MTN’s biggest market with over 60 million subscribers.
Africa’s biggest mobile phone company said it was still in talks with regulators (the Nigerian Communications Commission, NCC) about the final size of the penalty. “There remains some uncertainty as to the final quantum (amount) of the Nigerian fine, should an out of court settlement be reached,” the company said.
MTN Nigeria was handed a 5.2 billion dollars penalty in October 2015 for failure to disconnect 5.1 million unregistered SIM cards, with a charge of N200,000 on every unregistered subscriber. This prompted weeks of lobbying that led to a 25 per cent reduction to 3.9 billion dollars. But the company was still not prepared to pay the lower fine which equates to more than twice MTN’s annual average capital spending over the past five years.
MTN, though, has challenged the fine in Nigeria’s courts. A Lagos judge, earlier this year, also adjourned the matter to March 18 after MTN requested for an out of court settlement. It was reported that MTN has also enlisted the services of former US Attorney General, Eric Holder to mediated in its talk with the Nigerian authorities.