MTN Says Earnings Fell 20% on Loss of Nigerian Subscribers

  • Outcome of talks about $3.9 billion fine remains uncertain
  • MTN shares gained 1.1%; have risen for five consecutive days

MTN Group Ltd., Africa’s biggest wireless operator, said 2015 earnings fell at least 20 percent due to a a loss of business in Nigeria, where regulators withheld services and forced the company to cut off 5.1 million customers.

Basic earnings per share excluding one-time items were at least 3.07 rand lower than the 15.36 rand reported in 2014, the Johannesburg-based company said in a statement after the market closed on Thursday. The Nigerian Communications Commission ordered MTN to disconnect subscribers that weren’t registered as part of an effort to tighten security in a country fighting an Islamist insurgency.

The row in Nigeria could cost MTN more. The company is locked in discussions with the government over a proposed $3.9 billion fine imposed after the wireless operator missed a deadline to disconnect the unregistered subscribers. A Lagos court last month adjourned a hearing called by MTN so the two sides could reach a settlement.

“There remains some uncertainty” surrounding the outcome of the talks, MTN said. The penalty was reduced from an original $5.2 billion in December. 

Fighting Crime

Security agencies in Nigeria, battling insurgents from Islamist group Boko Haram, have sought to cut off service to unregistered users as they fight crime in a country with poor identity records.

“Negotiations around the Nigerian fine continue, and we expect MTN to reach a settlement well below the NCC’s last offer of $3.9 billion,” Avior Capital Markets analyst David Lerche said in a note to clients. 

MTN shares gained 1.1 percent to 153.70 rand at the close in Johannesburg, a fifth consecutive day of rises, valuing the company at 284 billion rand ($18.6 billion). The stock is still 19 percent down since the fine imposed by the Nigerian Communications Authority was first made public on Oct. 26.

Nigeria is MTN’s biggest market with 63 million customers. The company has a total of 233 million subscribers across Africa and the Middle East.

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