MTN declares first loss in 20 years as NCC fine cuts profit

MTN Group, Africa’s biggest mobile phone operator flagged lower first-half profit on Tuesday, attributing it to a hefty fine in Nigeria and sending its shares sliding nearly 4 percent.

Daily Times recalls that after months of talks, MTN said on June 10 it had agreed to pay a heavily reduced fine of 330 billion naira ($1.2 billion), or a third of the initial penalty, in a settlement with Nigeria for missing a deadline to deactivate more than 5 million unregistered SIM cards.

The company, whose headline earnings per share (EPS) came in at 654 cents in the first half of 2015, did not give a forecast range for this year’s figure. But the company said the penalty was likely to wipe 474 cents off total headline EPS this year, the primary measure of profit in South Africa.

Shares in MTN dropped as much as 3.8 percent shortly after the trading update, before recouping some of the losses to trade 2.5 percent lower at 138.20 rand by 0753 GMT.

MTN has said its Nigerian business will pay the fine in local currency. The penalty was worth $1.7 billion when it was announced, but the naira has fallen sharply since then, cutting the equivalent dollar value by about $500 million.

The company also said its results were affected by underperformance in its home market and in Nigeria, where it had to cut off another 4.5 million SIM cards to comply with the local regulator’s user registration requirement.

In a bid to offset slowing profits from basic telecoms services, MTN is also expanding into mobile banking and e-commerce.

But analyst are of the view that it  will throw  the company into an unfamiliar sphere of finance with increasing regulatory risks as authorities step up efforts to combat illicit money transfers.