MTN posts first-ever loss after tallying impact of Nigeria fine

MTN Group Ltd. reported a first-ever per-share loss as a public company as Africa’s biggest mobile-phone operator agreed to settle a record fine in Nigeria and was hurt by weaker earnings in South Africa.

The loss will be between 2.85 rand and 3.15 rand per share in the six months through June, the Johannesburg-based company said in a statement on Thursday. The so-called headline figure, which excludes one-time items, will be a loss of between 2.55 rand and 2.85 rand per share.

The biggest contributor to the decline was MTN’s agreement to pay a record 330 billion naira ($1 billion) fine in Nigeria, the company’s largest market. The penalty was levied in October after MTN missed a deadline to disconnect unregistered subscribers, and the subsequent loss of customers further hurt operations in the country.

“MTN pushed the value of the entire fine onto the income statement,” Byron Lotter, a money manager at Vestact Ltd., which holds MTN stock, said by phone. “This is a once-off and expectations are that they will recover in the next year.”

The shares fell as much as 4.3 percent in early trading in Johannesburg, the most since June 27, and recovered to trade 0.1 percent higher at 132.70 rand as of 10:24 a.m. local time. The stock lost as much as a third of its value after the fine was levied in October and is still 30 percent below its level when the penalty was announced.

The South African business, the company’s no. 2 market, is expected to report a decline in earnings before interest, taxes, depreciation and amortization margin for the half-year period, MTN said. Losses from mobile-phone towers and digital businesses also contributed to the first-half performance, as did the foreign-exchange impact of weaker operating currencies against the U.S. dollar.

Turning around the Nigeria business will be a top priority for incoming Chief Executive Officer Rob Shuter, who will join the company from Vodafone Group Plc by July 1, 2017.

“MTN still has a lot to do and it will be all about implementation,” Lotter said. “That’s up to management. Vestact is very excited about the company’s new management team.”

 ~Bloomberg