19th July, 2016
MTN Group, Africa’s biggest mobile phone operator, flagged lower first-half profit on Tuesday, blaming a hefty fine in Nigeria and sending its shares sliding nearly 4 percent.
On June 10 after months of talks, MTN had agreed to pay a heavily reduced fine of 330 billion naira ($1.2 billion), or a third of the initial penalty, in a settlement with Nigeria for missing a deadline to deactivate more than 5 million unregistered SIM cards.
The Johannesburg-based company, whose headline earnings per share (EPS) came in at 654 cents in the first half of 2015, did not give a forecast range for this year’s figure. But it said the penalty was likely to wipe 474 cents off total headline EPS this year, the primary measure of profit in South Africa.
Shares in MTN dropped as much as 3.8 percent shortly after the trading update, before recouping some of the losses to trade 2.5 percent lower at 138.20 rand by 0753 GMT.
The company has said its Nigerian business will pay the fine in local currency. The penalty was worth $1.7 billion when it was announced, but the naira has fallen sharply since then, cutting the equivalent dollar value by about $500 million.
MTN also said its results were affected by underperformance in its home market and in Nigeria, where it had to cut off another 4.5 million SIM cards to comply with the local regulator’s user registration requirement.
In order to offset slowing profits from basic telecoms services, MTN is expanding into mobile banking and e-commerce.
Reuters reports that will throw it into an unfamiliar world of finance with increasing regulatory risks as authorities step up efforts to combat illicit money transfers.
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