MTN Adjusts To New Realities, Cuts Subscriber Forecast by 4.4%

MTN Group

After MTN Group Limited [JSE: MTN] complied with Nigeria government directive to deactivate unregistered lines, it is expected nothing will remain the same for the Africa’s largest mobile carrier.

MTN just announced that its customer base dropped by 1.4% within the first quarter of the year. Nigeria, its largest market in its 22 country presence in Africa recorded the largest drop.

Source: Google Finance

The carrier’s current subscriber base in Africa now stands at 229 million. To make the situation more worrying, South Africa, its second largest market also saw a decline. In a call to analysts, Phuthuma Nhleko, the group’s Chairman said the company has cut its full year growth forecast from 12.5 million to 11.95 million subscribers, representing a downgrade of -4.4%.

To explain their action going forward, Phuthuma told Bloomberg that “in order to mitigate any future regulatory challenges, the group took an exceptionally conservative stance by disconnecting all subscribers who could possibly be deemed to be non-compliant,”. 

As a warning that its Q1 2016 results will be lower than it had estimated, Phuthuma said: “This has had a significant favourable impact on total subscriber growth and revenue”

In A Stalemate?

MTN is still liaising with the Nigerian government on the record USD 5.2 billion fine the company received for not following local regulations on SIM registration in 2016. While the company has made an advance payment of NGN 50 billion (USD 252 million), talks were called off by Adebayo Shittu, Nigeria’s Communications Minister.

In a statement released to the media yesterday, Shittu said negotiations have been called off pending when Nigeria’s parliament finalized their investigations into the circumstances surrounding the fines and what is appropriate for MTN to pay.

Nigeria’s lower chamber of the parliament are insisting that MTN must pay the full fines with no deductions. While Ferdi Moolman, MTN Nigeria’s CEO has refused to appear at the parliaments invitation, it is interesting to note that MTN’s initial payment might have given it a soft landing by not having any deadlines to pay the fines hanging on its neck.

Shares of MTN on the Johannesburg Stock Exchange, JSE has fallen up to 22% since the Nigerian government imposed the hefty fine on the company. MTN is mulling to list on the Nigeria Stock Exchange, NSE. A move some quarters in the Nigerian society viewed as an appeasement to Nigerian government.

Featured image: Sahara Reporters


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