MTN Group is set for the first half-year (H1) loss in over 20 years as the Nigerian communications Commission (NCC) N330 billion fine cuts its profit drastically.
Shares of MTN Group Ltd. fell in Johannesburg trading as Africa’s largest mobile-phone company said it expects to report a first-half year loss after agreeing to pay a record fine in Nigeria.
The shares dropped 2.5 percent to 138.13 rand after earlier slumping as much as 3.8 per cent, the most in three weeks on a closing basis.
In a statement on Friday, MTN told shareholders to expect “negative basic headline earnings per share (HEPS) and basic earnings per share (EPS) for HY2016”.
In the first half of 2015, MTN reported headline earnings per share of $6.54 (654 cents) and basic earnings per share of $6.53 (653 cents).
In 2016 however, this is expected to be cut by close to $5 per share, following NCC fine in its largest African market, Nigeria.
“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.
“The Nigerian regulatory fine is expected to have an estimated negative impact of 474 cents on HEPS and EPS, respectively.”
“Foreign exchange losses in a number of operations, losses from joint ventures and associates and hyperinflation adjustments on MTN Irancell are also expected to have a negative impact on HEPS and EPS for HY2016.
“HY2016 results are further expected to be negatively impacted by the under-performance of MTN Nigeria and MTN South Africa.”
MTN said its Nigerian 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 NCC subscriber registration requirements.
“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. MTN South Africa is expected to report a decline in the Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin, impacted by the marked increase in handsets sold during HY2016.
“A further trading statement will be issued once the Company obtains a reasonable degree of certainty as to the likely range within which the HEPS and EPS are expected to be finalised.”