MTN posted a 3.11% gain yesterday as it traded R3.56 firmer. The positive close was the third for the week and takes the cumulative weekly price gain to 5.26%. Yesterday’s price action is significant because it broke above its 20-Day SMA and resulted in the bullish crossovers for technical traders. This bullish technical indicator could signal the start of a move higher over the short- to medium-term. Should the share price close in the black this month, it would be the first monthly gain in the last six.
MTN was one of the top performers on Friday, up 5.06% at R144.62, helped along by a slump in the Nigerian Naira. This is most likely linked to optimism over the recently agreed upon fine being denominated in Naira. A significant weakening in the Nigerian currency will lead to a significant reduction of the dollar value of MTN’s payment. This looks likely as Nigeria’s currency prepares for a wild ride following the news that Nigeria’s Central Bank has decided to let the currency float. This marks the end of more than a year of being pegged at between 197 and 199 Naira per dollar. It is expected to move quickly towards the 260 level. The floating currency will also improve MTN’s ability to do business in the country as much needed liquidity returns to the Nigerian market.
MTN ended yesterday’s session on a positive note, with the stock gaining 2.41% as it moved to settle at R135.20. This comes after Standard & Poor re-affirmed MTN’s credit rating, although it did maintained its negative outlook on the group. Unsurprisingly, this negative outlook stems from the uncertainty regarding the final size of the Nigerian fine. Last week saw the Nigerian Parliament launch an inquiry into whether or not the NCC was authorised to reduce the fine from an initial figure of $5.2bn to the current $3.9bn. It also seems the market is not yet giving credence to the rumours the fine may triple to as high as $15bn.
MTN once again featured in the news on Friday, after the group released a SENS advising shareholders not to make decisions based on media speculation. This follows on from reports MTN had proposed to pay $1.5bn in order to settle the outstanding dispute, with the payment comprising cash instalments, bond purchases and network access. Although the alleged offer is substantially lower than the $3.9bn fine, its remains considerable higher than the $600mn provision the company put aside. The market appeared to have mixed feelings on the stock, as the share fell 1.67% to close at R145.03, despite gaining as much as 3.6% earlier in the session.
MTN finished up 4.33% after spiking as much as 12.59% during the day. The exaggerated movement came after the group released results for the year ended 31 December 2015, in which revenue increased 0.1% to R146.353bn and group subscribers rose by 4.1% to 232.5mn. This 4.1% increase was in spite of disconnecting 10.4mn subscribers in Nigeria and Uganda due to regulatory requirements. During the period, data revenue increased by 30.2% to R33.874bn, offsetting a 5.6% decline in voice revenue. Overall, EBITDA decreased by 8.6% to R59.918bn, while the EBITDA margin fell by 3.9 percentage points to 40.9%. As a result, reported basic headline earnings per share fell by 51.4% to 746 cents. It must be noted this was largely as a result of the R9.287bn provision that was made for the Nigerian regulatory fine, which negatively impacted headline earnings per share by 402 cents. Excluding the effect of the provision, as well as number of other factors, headline earnings per share declined by 14.3%. Lastly, the board declared a final dividend of 830 cents per share, bringing the total dividend for the year to 1,310 cents, representing a 5.2% increase on the previous period.
On Thursday, MTN once again featured in the news for all the wrong reasons, with the stock ending 4.32% lower at R112.62. During the session, news broke that MTN was among the mobile-phone operators named for allegedly evading taxes in a report by Cameroon’s National Anti-Corruption Commission. In it, the regulator announced that the ministries of finance and post and telecommunication allegedly colluded by providing illegal tax rebates. In response, MTN’s Cameroon unit has denied being part of any corruption-related actions and has stressed its interactions with the Government of Cameroon and its representatives have always been transparent and legal.
Continue reading MTN: Another day, another crisis
On Monday, MTN climbed 2.3% to trade at R120.50, boosted by recent developments regarding its subsidiary in Iran. On Saturday, the US announced it, along with a number of world powers, had lifted a host of devastating sanctions against the country. As a result, MTN would now be able to free up more than $1bn in frozen accumulated dividends, which has accrued to them due to their 49% stake in the unlisted Irancell. Irancell currently features as the country’s second largest mobile phone operator when measured by number of subscribers. Despite the recent uptick in its share price, MTN has still fallen around 37% in the last 12 months.
Continue reading MTN boosted by removal of Iranian sanctions
In what has been a tumultuous week for MTN, the stock ended 4.93% lower on Thursday following news reports from Nigeria that the group had completed the acquisition of Visafone Communications. This comes after the Nigerian Communications Commission, the same entity which has levied the massive fine on MTN, approved the deal. According to reports, Visafone currently has around 2mn customers in Nigeria, giving it around 1% of the total market. However, the rationale behind the deal is that the acquisition will give MTN access to the radio frequency spectrum in the 800MHz band, enabling it to build a widespread 4G/LTE network offering.
Continue reading MTN: Acquisition of Visafone
MTN received yet another letter form the Nigerian Communications Commission on Friday regarding its massive fine. After first receiving a letter on the third of November, outlining a reduction of the fine to around $3.4-billion, the group received another letter later during the day indicating that there had been an error in the first letter. The second letter, which was stated to supersede the first letter, informed the company the fine had actually been reduced by 25% to 780-billion Naira, or $3.9-billion. The payment date remained 31 December 2015, while neither the first letter nor the second letter set out any details on how the reduction was determined. The company is carefully considering its response and the Executive Chairman, Phuthuma Nhleko, has re-engaged with the Nigerian Authorities before responding formally.
Continue reading MTN: More Nigerian shenanigans
In a SENS released early this morning, MTN advised shareholders that the Nigerian Communications Commission has reduced the fine imposed on the company from $5.2bn to $3.4bn. In addition, the NCC has informed MTN the reduced fine will now be due on the 31st of December 2015. As it stands, MTN is carefully considering the NCC’s reply and will now urgently re-engage with Nigerian authorities before responding formally. Hence, it comes as no surprise that shareholders have also been advised to exercise caution when dealing in the company’s securities until a further announcement has been made.