Menu

MTN, Africa’s largest mobile operator, warned investors today to expect a full-year loss in 2016 due mainly to the regulatory fine imposed on its Nigerian unit for failing to disconnect unregistered users.

The Johannesburg-headquartered company said it expects 2016 headline earnings per share (HEPS) and basic earnings per share (EPS) – South Africa’s main profit measure – to record losses compared with 1,204 cents in HEPS and 746 cents in EPS reported in the previous year.

“The expected decline in the HEPS and EPS is mainly as a result of the regulatory fine imposed on MTN Nigeria following a resolution with the Federal Government of Nigeria on 10 June 2016,” the company said in a trading statement posted on its website. “The Nigerian regulatory fine is expected to have an estimated negative impact of approximately 474 cents on HEPS and EPS, respectively.”

In June last year, MTN reached a deal with the Nigerian government to pay N330 billion over three years to settle the regulatory fine imposed on its local subsidiary for failing to disconnect five million unregistered SIM cards. As part of the deal, MTN also agreed to list its Nigerian unit on the local stock exchange. The company reported a half-year loss of $456.8 million in August last year owing to the impact of the fine on its financial position.

Besides the regulatory fine, MTN said the full-year loss was also driven by the underperformance of its units in Nigeria and South Africa in the first half of 2016.

“MTN Nigeria's first half performance was impacted by the disconnection of 4.5 million subscribers in February 2016 in compliance with the Nigerian Communications Commission subscriber registration requirements,” the company said. “The withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the naira against the dollar also negatively impacted MTN Nigeria's performance.”

MTN said the disappointing results from MTN South Africa in the first six months of the year were largely due to the company’s poor postpaid performance.

According to MTN, other factors that contributed to the negative 2016 results include foreign exchange losses in a number of operations, losses from joint ventures and associates, additional depreciation resulting from prior hyper-inflation adjustments in MTN Irancell, the Zakhele Futhi tax and share-based payment charges and professional fees incurred in respect of the settlement of the Nigerian regulatory fine, and the planned listing of MTN Nigeria.