MTN shares drop 18% amid Nigeria nightmare

Shares in Africa’s largest mobile operator, MTN, declined by as much as 18% by the close of play on Friday – its worst levels since the late 90s.

It follows a trading statement published by the group last Thursday, warning that it expects a 20% drop in headline earnings for the full year ended December 2015.

MTN said that the biggest factor for its earnings fall is its operation in Nigeria – which makes up for nearly 40% of its sales.

The Nigerian Communication Commission (NCC) fined MTN ₦1.04-trillion (around R71-billion at the time) in October 2015 for not disconnecting unregistered SIMs on its network.

After negotiations with Nigerian authorities, the fine was reduced by 25% to ₦780-billion.

The group said that, 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”.

On Friday, shares in MTN declined R27.70, or 18.02% to R126.00 on the JSE, giving the company a market cap of R232.5 billion. MTN has wiped off more than R86 of its price over the past year – or 41% of its value.

Rival operator Vodacom, meanwhile, closed at R150.80 on Friday, giving the company a market cap of R224 billion.

The Federal High Court in Lagos, Nigeria has given MTN until mid March to reach a settlement with the Nigerian regulator.

“At this juncture it looks like some investors might be throwing in the towel on MTN,” Sasha Naryshkine, a director at Johannesburg-based money-manager Vestact, told Bloomberg.

“Investors need clarity,” Naryshkine said. “And they really need clarity on what is happening with this Nigerian fine.”

MTN is expected to publish its results on March 3.

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MTN shares drop 18% amid Nigeria nightmare