The Johannesburg Stock Exchange suspended the trading of shares in MTN for several hours on Monday after the telecoms group’s stock plummeted following a $5.2bn fine by Nigerian regulators.
MTN’s share price has been battered since the company confirmed
that the Nigerian Communications Commission had imposed the fine in
relation to a dispute over the way in which it disconnected 5.1m
unregistered Sim cards in its biggest market.
Shares were down more than 6 per cent in late Monday trading.
The company’s shares have fallen more than 25 per cent since news of the fine first broke a week ago, slashing its market value by about R75bn ($5.4bn).
The fine was the equivalent to more than a fifth of the group’s market value before the share slump, and greater than the $4bn in sales the company generated from Africa’s most populous nation last year.
MTN has dispatched senior executives, led by chief executive Sifiso Dabengwa, to Nigeria in a bid to reach a settlement.
Stock in the company fell by as much as 8 per cent on Monday following reports in the Nigerian media that MTN had agreed to pay the $5.2bn in full.
MTN declined to comment. But a person familiar with the discussions said it had not agreed to pay the entire sum and was still in negotiations with Nigerian authorities to “arrive at some kind of agreement”.
MTN said in a statement to the market: “Shareholders should specifically exercise caution when reacting to information on this matter which has not been released by the company.”
Stephen Meintjes, an analyst at Momentum SPV Securities, said the group could have been more forthcoming with information about the regulatory issues in Nigeria before the announcement of the fine.
“Shareholders should have been warned that there was a storm brewing in Nigeria,” he said.
An analyst at a South African asset manager echoed this view. “The pressure is on them to come out with something substantial sometime soon to help the share price,” the analyst said.
Nigerian authorities have long highlighted the disconnection of unregistered Sim cards as a security related matter as the country battles an insurgency by Boko Haram Islamists in the north and kidnappings for ransom in other parts of the country.
The fine was calculated on the basis of a 200,000 naira penalty for every unregistered Sim card not disconnected by a deadline set by the regulators.
Three smaller telecoms companies operating in Nigeria — Glo, Etisalat and Airtel — are all believed to have faced similar requests to disconnect unregistered Sim cards but none of them has been fined.
Since entering the market in 2001, MTN has built up a subscriber base
of more than 60m and the market contributes to just over a third of the
group’s total sales.
Credit-FT
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