MTN Falls Most in 17 Years as Nigeria Operations Hurt Profit

  • Stock falls as much as 18%, most since Nov. 1998, on warning
  • 2015 earnings at least 20% lower; no progress on Nigeria fine

MTN Group Ltd. shares declined the most in more than 17 years after Africa’s biggest wireless company said 2015 earnings fell at least 20 percent and talks on a record $3.9 billion fine in Nigeria remain unresolved.

The stock fell 18 percent, the most since August 1998, to 126 rand at the close in Johannesburg, the lowest since Feb. 2. That snapped five consecutive days of rises through Thursday, and extended the stock’s decline since the Nigerian penalty was made public in October to 34 percent.

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. MTN blamed the decline on a loss of business in Nigeria, where regulators withheld services and forced the company to cut off 5.1 million customers.

“At this juncture it looks like some investors might be throwing in the towel on MTN,” Sasha Naryshkine, a director at Johannesburg-based money-manager Vestact, said by phone. “There are many uncertainties feeding into the company’s share price right now, not least of which are the regulatory uncertainties in Nigeria.”

The company is locked in discussions with the government over the $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 until March 18 so the two sides could reach a settlement.

“Investors need clarity,” Naryshkine said. “And they really need clarity on what is happening with this Nigerian fine.”

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

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

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