The multi-billion rand regulatory fine imposed on MTN Nigeria has negative impacted MTN's earnings, as the group predicts a loss in basic headline earnings per share (HEPS) and basic earnings per share (EPS) for the past financial year.
The company predicts it will swing to a loss, for the year ended 31 December 2016, compared to HEPS of 1 204 cents and EPS of 746 cents reported in the prior financial year.
"The expected decline in the HEPS and EPS is mainly 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 telco said in a statement to shareholders today.
The telco agreed to pay 330 billion naira (R25.1 billion at the time, R14.1 billion today) after months of negotiations with Nigerian authorities. The original N1.04 trillion fine was slapped on MTN by the Nigerian Communications Commission in October 2015 for failing to meet a deadline to disconnect 5.1 million unregistered SIM cards in Nigeria.
The Nigerian regulatory fine is now expected to have an estimated negative impact of approximately 474 cents on HEPS and EPS for the year.
MTN says other contributing factors to the negative HEPS and EPS were foreign exchange losses in a number of operations; losses from joint ventures and associates; additional depreciation resulting from prior hyperinflation adjustments in MTN Irancell; the Zakhele Futhi tax and share-based payment charges; and professional fees incurred in respect of the settlement of the Nigeria regulatory fine and planned listing.
MTN says the results are further expected to be negatively impacted by the under-performance of MTN Nigeria and MTN South Africa in the first half of 2016. It says the disappointing interim results from MTN SA were largely due to the poor postpaid performance.
MTN Nigeria's first half performance was impacted by the disconnection of 4.5 million subscribers in February 2016 in compliance with the Nigerian Communications Commission subscriber registration requirements.
"The withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the naira against the USD also negatively impacted MTN Nigeria's performance," the group adds.
Consolidated results in rand terms from Nigeria were also affected by the weaker naira in the second half of the year.
MTN's share price had already fallen over 2.7% this morning on the back of the news, trading at around R114.50 per share.
MTN's financial results for the year ended 31 December 2016 are expected to be announced on 2 March.
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