MTN Group will consider raising its full-year dividend above forecasts if business conditions improve after the settlement of a record fine in Nigeria led to the first-ever half-year loss at Africa’s biggest mobile phone carrier.
The company will consider a higher full-year payout than the forecast R7/share “if operating conditions improve materially,” the Johannesburg-based carrier said in its first-half earnings statement on Friday.
MTN paid R13,10/share in 2015, while the payout was set at R2,50 for the half year through June.
MTN agreed to settle a 330 billion naira (US$1bn) fine by Nigerian authorities for missing a deadline to disconnect unregistered customers.
Weaker consumer spending and currency moves across many of its 22 markets in Africa and the Middle East also weighed on earnings.
The negotiations over the Nigerian fine took eight months and cost R1,3bn in professional service fees, MTN said. The company hired Eric Holder, the former US attorney general, to negotiate with the government on its behalf.
MTN is in the process of “a deep and fundamental strategic review of its operations and processes to ensure it is operating far more optimally”, the company said. “The financial performance for the period reflects the confluence of a number of material issues, which created the perfect storm.”
The shares fell by 2,1% to R130,70 as of 9.55am in Johannesburg, valuing the company at R241bn. The stock is down about 30% since the Nigerian fine was levied in October.
“They are doing a strategic review of the business, as I think they should,” said Peter Takaendesa, a senior analyst at Mergence Investment. “They know that they are losing market share in some of the countries that they are operating in. The encouraging thing is that the company might be moving into a new era, with new management. Unfortunately this could take up to 12 months.”
The carrier now expects to add 8,1m new customers in 2016, below an earlier forecast of 12m. Subscriber numbers were little changed at 232,6m at the end of June, compared with the end of 2015.
MTN made a provision for the full fine in its first-half results, drawing a line under the saga that’s hurt the stock and prompted the departures of company officials including CEO Sifiso Dabengwa. The so-called headline loss per share, which excludes one-time items, was R2,71, in the middle of a forecast range of R2,55 and R2,85.
Revenue increased by 14% to R78,9bn rand, propelled by a 32% rise in data sales. — © 2016 Bloomberg LP
