Johannesburg - Africa’s biggest mobile network, MTN Group, shrugged off its Nigerian woes on Monday and strengthened 2.36 percent to close at R109.52 after the Central Bank of Nigeria instructed the country’s banks to suspend any remittance of MTN dividends until further notice.
The Nigerian bourse stance comes as authorities accused the company of illegally repatriating $14 billion (R195 billion) from the country illegally over ten years.
MTN Nigeria said yesterday that it remained committed to the payment of the 330 billion naira (about R14 billion) fine related to the late disconnection of “improperly registered” SIM cards.
The company has not declared a dividend since April and MTN Nigeria had no intention to make any dividend payments over the next six months.
The Nigerian unit continued to refute the allegation that it had improperly repatriated funds from Nigeria, with MTN Nigeria chief executive Ferdi Moolman saying: “The allegations made against MTN Nigeria are completely unfounded and without any merit.”
But in its quarterly figures for September, the company beat market expectations after it reported stronger data revenue and improved subscriber numbers yesterday. Analysts said the deepening woes in Nigeria had not harmed the company and its performance much.
The telecoms giant’s shares strengthened almost 3.2 percent to trade at R110.11 a share on the JSE yesterday as it also said it would fast-track the starting date of its new chief executive Rob Schuter who was expected to join the company in March.
Paying off
MTN group executive chairman Phuthuma Nhleko said the September results were testimony that MTN’s transformation project, which initially focused on its key markets Nigeria and South Africa, with hard targets set for the next 12, 18 and 24 months, would pay off.
“Operations are expected to deliver the first results on clearly defined targets in the first half of 2017,” Nhleko said.
Nhleko also said that despite a difficult environment due to weaker macro-economic conditions, particularly in oil-dependent economies, and the regulatory challenges experienced, the group would benefit from the fundamental changes implemented.
Following the hefty Nigerian fine, the company appointed senior managers, including Felleng Sekha who joined the group as executive for regulatory affairs and public this month.
Jon Tullett, the research manager at International Data Corporation, said the September quarter results were much needed good news for the troubled operator on two levels.
“Firstly, MTN’s strong performance on network is good for transitioning from voice to data. Secondly, the acceleration of new chief executive is very important, they need strong established leadership to take them forward,” he said.
MTN was slapped with the record fine for unregistered SIM cards in Nigeria last year.
The highlights for the quarter included a 3.6 percent revenue growth in its South African unit and a 2.5 percent increase in its subscriber base in Nigeria to 60.5 million quarter on quarter.
MTN also made significant network improvement across the business, particularly in the Nigerian and South African operations, as voice and data traffic increased by 1.8 percent and 142 percent respectively year on year.
Group subscribers also increased 0.9’ percent quarter on quarter, while the company had begun the repatriation of funds from MTN Irancell to MTN Group.
Sibonginkosi Nyanga, an analyst at Momentum SP Reid, said MTN had beat market expectations as many people expected the quarterly figures would be much worse.
Nyanga said the company managed to grow its base despite its ongoing woes with more subscribers in contracts in South Africa and revenue that was better than anticipated.
He said the fact the share price was higher, did not reflect that Nigerian risk had been wiped out. “The Nigerian risk is still there. As long as the risk posed by Nigeria still hangs over MTN’s head, we will not see re-rating of its share price,” he said.
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