Brace yourself, MTN is declaring a full year loss for 2016

MTN

For those waiting for MTN’s full year result, there is a shocker coming your way. Africa’s largest mobile carrier is expected to report a full year loss.

The full year loss is attributed to its USD1 billion fine (NGN330 billion) slammed on the telecom giant after it contravened regulatory rule that all mobile lines must be registered in Nigeria.

MTN said in its trading statement released today that “Y2016 results are further expected to be negatively impacted by the under-performance of MTN Nigeria and MTN South Africa in the first half of 2016. MTN Nigeria’s first half performance was impacted by the disconnection of 4,5 million subscribers in February 2016 in compliance with the Nigerian Communications Commission subscriber registration requirements. The withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the Naira against the USD also negatively impacted MTN Nigeria’s performance. Consolidated results in Rand terms from Nigeria were affected by the weaker Naira in the second half of the year. The disappointing results from MTN South Africa in the first six months, were largely due to the poor postpaid performance”

It would be recalled that MTN Nigeria failed to meet the deadline. A development the Nigerian government claimed it negatively affected its effort to fight terror and deadly crimes in NIgeria’s north east region.

The markets are already punishing MTN Group. on the Johannesburg Stock Exchange, MTN Group shares fell by 3.82%, the lowest since last December.

As sign of what is to come, Reuters quoted reliable sources that “Underlying operational results for full-year 2016 were also affected by fees incurred for a planned listing in Nigeria and under performance of its unit there and in South Africa in the first half of 2016”.

The details of the loss is not yet known as the full result is billed to be released on 27th of February, 2017. In its third quarter result, MTN Group reported its first ever loss per share with revenue from Nigeria dropping on a year on year basis.

Many challenges are confronting MTN across its operations in Nigeria and South Africa. Apart regulatory fines it is paying, the company is facing a tougher position in how it books its revenue. Over-the-Top (OTT) applications such as WhatsApp, Facebook and Instagram are now getting more usage amongst the critical mass of its customer base who now subscribe to data bundles.

In Nigeria, MTN and its competitors were not able to increase their data prices in the fourth quarter of 2016 after the approval by the NCC was rejected by the general public and the Nigerian Senate kicked against the move as a result of harsh economic conditions and low disposable income of the masses.

MTN has also doubled down on its bullish stance. Its pan to list on the NSE has also been set aside pending when ‘regulatory conditions’ permit the listing.

NO matter how bad its result will be, MTN is expected to invest more in its marketing and technology, an under-investment will cause more harm to the company.