MTN shares off as investors await Turkcell clarity

Shares in mobile operator, MTN (MTN), lost ground in afternoon trade on the JSE on Monday (March 5, 2012), as investors await details on a threatened lawsuit from Turkcell over its licence in Iran.

MTN is due to publish its results on Wednesday (March 7, 2012).

By 13:25, shares in MTN declined R2.30 or 1.67% to R135.19; while rival Vodacom (VOD) added 20 cents to R102.60.

Telkom (TKG), meanwhile, continued to fall – off 30 cents, or R1.20%, to R24.60.

“Many investors will be waiting to see if MTN’s results meet expectations. MTN has a lot of skeletons in the closet, and just like Vodacom, it looks like data is the next frontier for mobile operators,” a local dealer told BusinessTech.

“Wednesday will be a chance for the group to provide an update on the situation in Iran. Many investors will be curious to get some detail around the accusations being made against the company,” the dealer added.

He pointed out that Telkom’s problems are well documented, including a host of management changes, the Multi-Links debacle, and an impending decision by the Competition Commission on a case of abuse of market dominance.

MTN Group said Friday that it expects a rise of between 41.8% and 46.8% in adjusted headline earnings per share, for the year ended December 2011, compared to 909.1 cents previously.

Attributable earnings per share are expected to increase by between 41.7% and 46.7%, and basic HEPS to increase by between 37.9% and 42.9%, MTN said.

It noted that prior year reported earnings included a R2.9 billion charge, associated with the implementation of the MTN Zakhele scheme, which had the effect of negatively impacting the prior year’s reported earnings. “If this charge is excluded, current year’s earnings growth would have been between 56% and 61% lower.

“The current year’s earnings are also positively affected by lower net finance costs,” it said.

In February, MTN advised that Turkcell Iletisim Hizmetlera AS (Turkcell) , which was unsuccessful in attaining the second GSM telecommunications licence in Iran, was looking to bring a case against the group in a US court.

MTN, which owns 49% of Irancell – the group that was awarded the 2nd Iranian GSM licence – said that it had been informed by Turkcell that it believes it has a claim against MTN and its relevant subsidiary. This, arising out of the award of the 2nd GSM Licence, based on alleged violations of United States laws, and has indicated an intention to bring such a claim before a United States court.

Turkcell claimed that MTN had asked South Africa to support Iran’s nuclear development in return for a license.

The Istanbul-based firm alleges that MTN made “improper payments to an Iranian and a South African government official,” during 2004 and 2005.

No such claim has been filed or served yet, MTN said in a statement.

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MTN shares off as investors await Turkcell clarity