Telecommunications group MTN warned on Tuesday that its profits for the six months ended June 30 2016 will have come under pressure as a result of the record-breaking fine imposed on it in Nigeria and pressures on the South Africa operations.
MTN, which will publish its interim results on August 5, said it expects to report negative basic headline earnings per share (EPS) and basic EPS for the first half of 2016.
In the prior year comparable period, it reported headline EPS of R6.54 and EPS of R6.53.
“The expected decline in the headline EPS and EPS is primarily as a result of the regulatory fine imposed on MTN Nigeria following a resolution with the federal government of Nigeria on 10 June 2016. The Nigerian regulatory fine is expected to have an estimated negative impact of R4.74 on headline EPS and EPS respectively.”
Foreign exchange losses in a number of operations, losses from joint ventures and associates and hyperinflation adjustments on MTN Irancell are also expected to have a negative impact on headline EPS and EPS, MTN said.
MTN Nigeria’s performance was also impacted by the disconnection of 4.5 million subscribers in February 2016, the final batch of subscribers to be disconnected in compliance with the Nigerian Communications Commission subscriber registration requirements.
The withdrawal of regulatory services which was reinstated on March 15 2016 with approval for promotions and price plans granted in early May 2016 also negatively impacted MTN Nigeria’s performance, it added.
MTN South Africa, meanwhile, is expected to report a decline in operating margin (measured using earnings before interest, tax, depreciation and amortisation), impacted by marked increase in handsets sold during the period.
“A further trading statement will be issued once the company obtains a reasonable degree of certainty as to the likely range within which the headline EPS and EPS are expected to be finalised.”
MTN’s shares dropped by 2.5% to R138.13 by 11.25am, after earlier slumping as much as 3.8%, the most in three weeks on a closing basis.
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