MTN sinks on profit warning - TechCentral

MTN sinks on profit warning


MTN Group fell in Johannesburg trading as Africa’s largest mobile phone company said it expects to report a first-half loss after agreeing to pay a record fine in Nigeria.

The shares dropped by 2,5% to R138,13 by 11.25am, after earlier slumping as much as 3,8%, the most in three weeks on a closing basis.

The 330bn naira (US$1,2bn) settlement in Nigeria, announced in June, will reduce earnings per share for the six months through June by R4,74, while foreign exchange losses, joint ventures and adjustments for inflation in Iran will further hurt results, MTN said in a statement on Tuesday.

MTN is seeking to turn the page on a dispute with the Nigerian government, which initially imposed a $5,2bn fine after the company missed a deadline to disconnect unregistered users.

Johannesburg-based MTN is overhauling senior management and has added new directors as it seeks to convince investors the penalty won’t be repeated and revive a share price that’s 36% lower than a year ago.

Earnings were also damped by underperformance in MTN’s two largest markets, it said.

Nigerian results were further weighed on by government-mandated subscriber disconnections and a temporary withdrawal of regulatory services, while profit margins in South Africa were narrowed by an increase in handset sales.

The loss would be the first over any half-year period for at least 20 years, data compiled by Bloomberg show.

MTN, which reported earnings per share of R6,53 for the same period a year earlier, said it will issue a further statement once it’s ready to provide more detail about the projected loss. The final results will be announced on 5 August.  — (c) 2016 Bloomberg LP

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