Mobile operator MTN says it expects to report a loss for the year ended December 2016, mainly as a result of its woes in Nigeria.
Shares in the group dropped nearly 5% in morning trade to R112.10, down from a high of R153 over the past year, and down from a peak of more than R260 in 2014.
The company said that basic headline earnings per share (HEPS) and basic earnings per share (EPS) for the period will be lower than HEPS of R12.04 cents and EPS of 746 cents in the prior 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 Nigerian regulatory fine is expected to have an estimated negative impact of approximately 474 cents on HEPS and EPS, respectively,” MTN said.
Other contributing factors to the negative HEPS and EPS for FY2016 were:
- Foreign exchange losses in a number of operations,
- Losses from joint ventures and associates,
- Additional depreciation resulting from prior hyperinflation adjustments in MTN Irancell,
- The Zakhele Futhi tax
- Share-based payment charges and professional fees incurred in respect of the settlement of the Nigeria regulatory fine and planned listing.
The struggling operator said that FY2016 results are further expected to be negatively impacted by the under-performance of MTN Nigeria and MTN 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 withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the Naira against the USD also negatively impacted MTN Nigeria’s performance, MTN said.
Consolidated results in rand terms from Nigeria were affected by the weaker Naira in the second half of the year.
The disappointing results from MTN South Africa in the first six months, were largely due to the poor postpaid performance, the group said.