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Profits ‘hammered’ at MTN

 

MTN, which is embroiled in a R59 billion fine imposed by the Nigerian watchdog, is expected to report a 20% reduction in basic headline earnings per share (HEPS) for the full-year to end-December 2015. By Gugu Lourie


HEPS – South Africa’s main profit gauge – at MTN, Africa and Middle East biggest mobile phone operator, have shrank on the back of under-performance of its biggest operation, MTN Nigeria.

“The negative earnings performance has been impacted by a number of factors with the operational underperformance in Nigeria, resulting from the subscriber disconnections and the withholding of regulatory services, being a key contributor to this,” the mobile phone giant informed investors on Thursday afternoon.

The company, which will report its earnings on March 3, said HEPS will be reduced to 307 cents for the year ended 31 December 2015 compared to 1 536 cents in the year to end 2014.

The expected decrease in earnings for MTN will exclude the proposed R59 billion fine by the Nigerian communications watchdog.

MTN was given a December 31 deadline to pay the fine for its failure to disconnect 5.2 million subscribers who did not register their SIM cards. The payment deadline has expired.

The South African-based telco has hired seven Senior Advocates of Nigeria (SAN) to fight the fine in the Federal High Court in Lagos. The initial fine was $5.2 billion and was in December reduced to $3.9 billion.

The hearings of the dispute were expected before the Federal High Court in Lagos, Nigeria on 22 January 2016.

However, MTN informed investors on the same day that the judge adjourned the matter to 18 March 2016 in order to “enable the parties to try and settle the matter. If the parties are unable to reach a settlement the matter will then proceed on that date”.

“Given the ongoing discussions taking place with the Nigerian authorities, there remains some uncertainty as to the final quantum of the Nigerian fine, should an out of court settlement be reached,”  MTN said on Thursday.

In January, MTN’s Nigeria CEO Ferdi Moolman told the media that the $3.9 billion (R59 billion) fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC) could bankrupt the mobile phone operator as it represents 95% of its annual turnover.

Moolman noted that though the fine was harsh on the mobile operator but said MTN has learnt its lessons from it and would work to restore relationship with the regulator, stakeholders and its customers.

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