Home » MTN projects losses in 2016, share fall on N330b Nigeria fine

MTN projects losses in 2016, share fall on N330b Nigeria fine

by Abbey Lily
MTN Adds 7.7m New Subscribers, Posts First Yearly Loss In Two Decades

MTN projects losses in 2016, share fall on N330b Nigeria fine

MTN projects losses in 2016, share fall on N330b Nigeria fine

MTN projects losses in 2016, share fall on N330b Nigeria fine
DUE to the challenges it’s currently facing at home in South Africa and in Nigeria, especially with the N330 billion fine, MTN Group expects to report a full-year loss in 2016.
   The expected loss has sent the telecommunications firm’s shares to a two-month low at the Johannesburg Stock Exchange.
   Africa’s most populous nation and biggest economy, Nigeria is MTN’s most lucrative but increasingly problematic market, hobbling its growth outlook.
   According to Reuters, the appointment of banker Rob Shuter, who starts next month, as chief executive is expected to bring operational strength and step up MTN’s hunt for returns, possibly in financial services.
  MTN, which makes a third of its revenue in Nigeria, yesterday in Johanesburg, said it expects a headline loss, and will issue a further trading statement on the likely range within which its headline loss is expected.
   Eight analysts polled by Reuters had expected the company to post a 39 per cent fall in headline earnings per share to 455 cents.
   Recall that MTN agreed in June 2016, to pay Nigeria a N330 billion ($1.05 billion at the time) fine for missing a deadline to cut off unregistered SIM cards from its network.
 The fine, which was originally set at $5.2 billion, shaved off 474 cents per share from headline earnings per share, a primary profit gauge that strips out certain one-off items.
   Already, out of the N330 billion, MTN had cough out N80 billion to the coffers of the Nigerian government after an agreement was reached for a staggered payment plan. The balance of N250 billion will be made in six tranches, which will last May, 31 2019.
   By the terms of agreement, MTN is expected to pay N30 billion to the Federal Government by March 31, 2017. In March 31, 2018 it is also to pay another N55 billion and on December 31, 2018 it will pay another N55 billion. Subsequently, March 31, 2019 it will pay N55 billion and the balance of N55 billion will be paid May 31, 2019.
   In the mix of paying the fine, MTN is being investigated by Nigerian lawmakers for illegally repatriating $14 billion between 2006 and 2016; the second major dispute analysts have said exposes the inherent risk of investing in frontier markets.
   Already, the Minister of Communications, Barrister Adebayo Shittu, three weeks ago, wanted Nigerians to encourage MTN and others, and not scare them away from the country.
   Shittu, answering questions from Reuters, said MTN was important to Nigeria and the presumption is that they are innocent of the latest allegations levelled against the company.
   “Nobody will say that MTN is not important to Nigeria – we must encourage them, we must not scare them away from Nigeria,” Shittu stated.
  “The presumption is that they are innocent and we pray they remain innocent. They must stay,” he stated.
   “They have a right to repatriate their profits as long as it is legitimately done,” said Shittu, adding that any time MTN is suspected of breaking the law, it will be investigated, though the “facts against them must be established beyond reasonable doubt.”
“Everyone who is in business will have ups and downs. You don’t throw away the baby with the bathwater.”
   Meanwhile, shares in MTN, which fell more than four per cent at market open yesterday, were 2.18 per cent lower at 115.16 rand, the lowest level since December.
  Underlying operational results for full-year 2016 were also affected by fees incurred for a planned listing in Nigeria and under performance of its unit there and in South Africa in the first half of 2016.
   MTN has said it aimed to list its Nigerian operations on the local bourse during 2017, subject to market conditions. However, the unit has been battered by the weak economy, depreciation of the Naira and the disconnection of l4.5 million subscribers in February last year.

Related Articles

Leave a Comment