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MTN, Africa’s biggest telecommunications company, recorded an annual loss of $108m on Thursday, its first in 20 years, underscoring the damaging blow of a fine in Nigeria and of currency depreciations there and in several other key markets.
The Johannesburg-listed company said its headline loss was 1.4bn rand ($108m). The headline figure is equivalent to a loss of 77 cents per share in the year ending December, compared with earnings of 746 cents per share a year earlier.
A record $5.2bn fine levelled by Nigeria’s regulator in 2015 was settled by MTN in mid-2016 for the naira equivalent of around one-fifth of the original sum. This came after the company battled, initially in court in Nigeria and then in negotiations with the country’s presidency, for months. The fine slashed 10.5bn rand ($768m) from headline earnings, the company said.
Though MTN has drawn controversy for its high-risk, high-reward strategy before, most notably four years ago in Iran, the results confirm how the penalty did unprecedented damage. About $10bn in market value has been lost, according to analysts.
“There’s absolutely no question that MTN has gone through a very difficult period in the past 12 months, really commencing…with the fine in Nigeria in 2015, which of course cascaded into 2016,” said Phuthuma Nhleko, MTN’s executive chairman, in a results presentation in Johannesburg. He and other MTN executives proceeded to use the words “challenges” and “challenging” dozens of times during an hour-plus presentation and Q and A.
He said “unforeseen macroeconomic challenges” in Nigeria also hit profits. Africa’s most populous nation is in its worst economic crisis in 30 years because of the collapse in oil prices, on which it depends for most of its foreign earnings.
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