MTN shares plummet 12.5% after R71 billion fine

Shares in mobile operator, MTN, declined as much as 12.49% to R167 after on Monday, after the Nigerian Communications Commission imposed a fine of $5.2 billion  (R71 billion) on its operation in Nigeria.

MTN lost nearly R24 rand, on the Johannesburg Stock Exchange, its biggest single day loss since 1998 according to Bloomberg, taking the group’s market cap down to R308 billion.

The fine relates to the timing of the disconnection of 5.1-million MTN Nigerian subscribers in August and September 2015.

MTN released the following statement on Monday:

Shareholders are advised that the NCC has imposed a fine equivalent to US$5.2 billion on MTN Nigeria.

This fine relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September 2015 and is based on a fine of N200, 000 for each unregistered subscriber.

MTN Nigeria is currently in discussions with the NCC to resolve the matter in recognition of the circumstances that prevailed with regard to these subscribers.

Analyst at Momentum Asset Management, Wayne McCurrie told Bloomberg that the fine “is way, way higher than the profits they’re going to make from Nigeria for many years to come”.

“That fine is totally and utterly out of proportion to whatever regulation they are contravening, if any. That’s an astonishing amount of money.”

MTN, which connects approximately 233 million people in 22 countries across Africa and the Middle East, has its biggest market in Nigeria, with a subscriber base of  62.5 million.

In a quarterly update last week, Africa’s biggest operator reported that MTN Nigeria recorded a marginal decline in subscribers “mainly as a result of the disconnection of 5.1 million subscribers at the end of August 2015 in line with industry-wide regulatory registration requirements”.

“While management continues to engage with the regulator, performance continues to be impacted by ongoing regulatory restrictions,” MTN said.

More on MTN

MTN hit with R71 billion fine

MTN grows its customer base in South Africa

MTN threatens to pull out of South Africa

 

Must Read

Partner Content

Show comments

Trending Now

Follow Us

MTN shares plummet 12.5% after R71 billion fine