MTN in shares drop drama

Nigerian fine worries cause halt in trading

SOUTH Africa’s JSE briefly suspended trading in telecoms firm MTN Group yesterday after the stock fell as much as 8% as Africa’s largest mobile telecoms operator battles to reduce a $5.2-billion (about R71-billion) fine it faces in Nigeria.

The stock has fallen more than 25% in the past seven sessions, wiping in excess of $4.4-billion (about R60-billion) off its market value, after the Nigerian Communications Commission (NCC) imposed the fine last week for failure to cut off unregistered users.

After trading resumed hours later, MTN shares were down 5.9% at R148.51.

They earlier touched a three-year low of R142.50.

One trader said the stock tumbled due to speculation the company had agreed to pay the fine, which is equivalent to almost a quarter of Nigeria’s 2015 budget of $22-billion (about R290-billion) and would wipe out more than two years of MTN’s annual profits.

“There has been some speculation that the company has agreed to pay the fine, but we really want to hear it from the company itself,” Afrifocus Securities’ portfolio manager Ferdi Heyneke said.

MTN said it was still in talks with Nigerian authorities about the fine.

MTN chief executive Sifiso Dabengwa flew to Abuja to make what three sources familiar with the matter said was an attempt to have the penalty reduced.

NCC on Friday gave MTN two weeks to pay the fine.

The fine relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September and is based on a fine of 200 000 naira (about R14 000) for each unregistered subscriber.

Nigeria has been pushing the industry to have every Sim card registered on worries that unregistered cards were being used in a country facing Islamic militant group Boko Haram’s insurgency.

It was unclear what would happen to MTN, whose Nigerian licence is up for renewal in 2016, if the company fails to pay the fine, but NCC’s powers include revoking licences.

Some analysts said the size of the fine risked damaging Nigeria’s efforts to shake off its image as a risky frontier market for international investors.

Others said the fine showed Nigerian regulators were keen to enforce the law.

The fine, if imposed as it is, would leave MTN with little money to spend on its network in Nigeria, where it is the biggest player, Africa Analysis researcher Dobek Pater said.

Meanwhile, MTN has warned that shareholders should specifically exercise caution when reacting to information not officially released by the company.

-TJ Strydom and Tiisetso Motsoeneng

 

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