MTN share price crashes again
By more than 8% over fresh concerns that it is not making headway in reducing the $5.2bn Nigeria fine.
FILE PICTURE: Members of the Communication Workers Union take part in a picket, 21 May 2015, outside the MTN offices in Fairland, Johannesburg. The union is demanding a ten percent salary increase, higher weekend and public holiday wages and that temporary staff are made permanent at the telecommunications company MTN. Picture: Alaister Russell
MTN’s share price slumped by more than 8% on Tuesday morning over fresh concerns among investors about whether the group, which is listed on the JSE, will have to pay the full amount of a record-setting fine imposed on it by Nigerian authorities.
Soon after markets opened on Tuesday, MTN’s share price slumped by as much as 8,7%, reaching a new multi-year low of R132,01/share. It regained some composure and closed down by 1.63% at R142,25.
The slump in the share price comes after Reuters on Monday evening reported that the Nigerian Communications Commission was refusing to back down over the US$5,2bn (R75bn) fine, which is by orders of magnitude the largest regulatory fine imposed on a telecommunications company anywhere in the world.
The commission imposed the fine — described by many analysts as excessive punishment — after MTN allegedly failed to disconnect 5,1m unregistered Sim cards in time for an 11 August deadline.
The size of the fine has raised concerns about the impact it could have on foreign investment in Nigeria, whose economy has come under severe pressure in the past year thanks to the collapse in global oil prices.
Nigerian Communications Commission spokesman Tony Ojobo said on Monday that the regulator was considering a plea for leniency from MTN, but the fine would remain because the group had admitted to breaking the law, Reuters reported.
“The fine remains but the appeal and other engagements with MTN may affect the payment deadline,” Ojobo said.
The crisis has already claimed the scalp of MTN Group CEO Sifiso Dabengwa, with former CEO Phuthuma Nhleko stepping in on an interim basis as executive chairman.
The latest collapse in MTN’s share price — it had already lost almost 25% of its value since the crisis started — won’t be met well by shareholders.
MTN’s largest shareholder, the Public Investment Corp, with 16,6% of the equity, has already publicly lambasted MTN’s management team and board of directors of the way they have handled the situation.
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