MTN Share Volumes Soar to 5-Year High as Stock Extends Slump

  • Share dealing jumps to 4 times 3-month daily average
  • Momentum's McCurrie sees `intense pressure' to cut penalty

Trading volumes in MTN Group Ltd. jumped to the highest level since October 2010 as the threat of a $5.2 billion fine by Nigerian regulators sent the shares of Africa’s largest mobile-phone operator tumbling for a second day.

Almost 30.8 million securities in the Johannesburg-based company worth 4.97 billion rand ($363 million) changed hands on Tuesday, 4.3 times the daily average over the past three months, according to data compiled by Bloomberg. The stock capped its biggest two-day decline since October 2008, wiping 57 billion rand off its market value to 295.2 billion rand.

MTN will meet with the Nigerian Communications Commission on Wednesday and will challenge the penalty, according to a person familiar with the matter, who asked not to be identified because it is private. The fine relates to the timing of more than 5 million subscribers’ disconnections in August and September, Johannesburg-based MTN said in a statement Monday.

“If they’re faced with a fine like that, there will be intense pressure on the regulator to either bring the fine down or give some other form of mitigating circumstances,” Wayne McCurrie, a money manager at Momentum Asset Management, who owns MTN stock, said by phone. “That fine is totally and utterly out of proportion to whatever regulation they are contravening, if any.”

The stock slipped 4.2 percent to 159.98 rand on Tuesday, the lowest closing level April 2013, after plunging more than 12 percent on Monday, which marked the biggest one-day drop since November 1998. MTN has declined 28 percent this year, compared with an 8 percent gain on the benchmark FTSE/JSE Africa All Share Index.

The fine illustrates the risk that increased saturation in African mobile markets brings, with stricter regulatory oversight of operators’ conduct, Bloomberg Intelligence analyst Ehran Gurses said. Substantial cuts to mobile termination rates and opposition to potential mergers in the industry pose further risks for operators, he said.

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