MTN Shares Dip After Suspension On $3.9bn Fine

MTN Shares Dip After Suspension On $3.9bn Fine

MTN Group Limited shares fell after the Federal Government suspended talks about a $3.9 billion fine on the South African mobile-phone company while the country’s House of Representatives completes an investigation into the nature of the penalty.
Bloomberg reported on Monday that the stock declined as much as 2.9 per cent, the most since May 12, and traded 1.5 per cent lower, valuing the company at 233 billion rand ($15 billion). The shares have plunged almost 35 per cent since the fine, originally set at $5.2 billion, was levied in October.
An analyst at Mergence Investment Managers, Peter Takaendesa, said said any delays in finding a resolution for the MTN fine will play into trading and keep MTN’s share price suppressed.
He said, “The big event to watch this week will be MTN’s annual general meeting, where the market might also get additional clarity.”
The decision to put talks on hold will frustrate MTN as it seeks to resolve a fine that was levied for missing a deadline to disconnect customers deemed unregistered in the country, which is battling an Islamist insurgency.
The company’s stock decline has cost MTN the title of Africa’s biggest wireless company by market capitalization, losing it to crosstown rival Vodacom Group Limited.
“MTN cautions shareholders not to make any decisions based on media reports,” spokesman Chris Maroleng said.
According to him, investors will be informed of any update to the fine negotiations via the stock exchange news service.
Spokesman for Ministry of Communications, Mr. Victor Oluwadamilare said on Friday that the lawmakers have set up a committee to investigate the MTN saga and they are still on it, adding that until they are through with it, nothing can be done.
He said, “The federal government, the Nigerian Communications Commission and the Ministry of Communications can do nothing about the MTN case until the committee concludes its thorough investigation. There’s no point dealing with a particular organization from different fronts. It would be counter-productive.”
The Executive Chairman, Phuthuma Nhleko returned to the helm in November for a six-month term to resolve the crisis, yet he remains in charge having not fulfilled his mandate. He will address shareholders at the annual meeting in Johannesburg today.
MTN’s last reported offer was to pay $1.5 billion in a combination of staggered cash payments, sovereign debt purchases and access to its network.
The Managing Director of Africa Analysis, Dobek Pater said, “This suggests that MTN might still be stuck in limbo, and that is not a good thing for them. Suggestions were that the negotiations were going on in a positive path for MTN, especially when the company received that first reduction. Now, with the investigation the process is back to the unknown.”