MTN was under pressure again on Friday as Africa and Middle East’s largest mobile phone operator predicted on Thursday afternoon a 20% drop in headline earnings per share (HEPS) for the year to end-December 2015. MTN Zakhele, the Black Economic Empowerment (BEE) scheme of MTN listed on the JSE BEE board, was no exception as it dropped 12.7% at R65.93 by 11:35am on Friday, valuing the counter at more than R6 billion. By Gugu Lourie
Shares in MTN were trading 18.5% lower at R125.31 by 11:35am, valuing the telco giant at more than R283 billion.
This was after the South African-based telco announced on Thursday that its HEPS will be reduced to 307 cents for the year ended 31 December 2015 compared to 1 536 cents in the year to end 2014. HEPS is South Africa’s main profit gauge.
The company said the expected decrease in earnings will exclude the proposed R59 billion fine imposed by the Nigerian communications watchdog.
It attributed the negative earnings performance to operational underperformance in Nigeria, resulting from the subscriber disconnections and the withholding of regulatory services.
MTN was given a December 31 deadline to pay the fine for its failure to disconnect 5.2 million subscribers who did not register their SIM cards. The payment deadline has expired.
The South African-based telco has hired seven Senior Advocates of Nigeria (SAN) to fight the fine in the Federal High Court in Lagos. The initial fine was $5.2 billion and was in December reduced to $3.9 billion.
The hearings of the dispute were expected before the Federal High Court in Lagos, Nigeria on 22 January 2016.
However, MTN informed investors on the same day that the judge adjourned the matter to 18 March 2016 in order to “enable the parties to try and settle the matter. If the parties are unable to reach a settlement the matter will then proceed on that date”.
Established in 2010, MTN Zakhele is a vehicle for previously disadvantaged South Africans to invest in MTN Group.
MTN Zakhele was transferred from the over-the-counter (OTC) to the JSE’s BEE board from November 5.
On listing the MTN Zakhele shares followed MTN lower, dropping from R14 billion to R11.4 billion.
MTN Zakhele has risen 7.86% in the past 7 days and 16.1% in the past 90 days.