MTN spent R1.3 billion on ‘professional services’ to negotiate Nigeria fine

Telecoms

MTN has reported a big drop in earnings for the six months ended June 2016, which it says is primarily down to its operations in Nigeria – including a regulatory fine.

The group said it paid R1.324 billion for  a range of professional services to help reduce its fine incurred after it failed to disconnect more than five million unregistered SIMs on its network in the country.

On 10 June MTN Nigeria resolved its issues with the Federal Government of Nigeria (FGN) and agreed to pay the FGN a total cash amount of 330 billion Nigerian naira $1.671 billion, over three years.

MTN said it would also comply with certain other regulatory conditions imposed as part of the settlement reached.

The company paid 50 billion naira (US$250 million) ‘in good faith’ on 24 February 2016, as part of the monetary component of the settlement, leaving a balance of 280 billion naira (US$1,418 billion, using the exchange rate prevailing at the time) outstanding.

In June 2016 the first scheduled payment of 30 billion naira (US$124 million) was made, with the remaining cash payable at 30 June 2016 amounting to 250 billion naira (US$882 million).

MTN said it accrued the present value of 280 billion naira (US$1,418 billion, using the exchange rate prevailing at the time), which in total had a negative impact of R10.5 billion on reported earnings before interest, tax, depreciation and amortisation and impairment of goodwill (EBITDA) and a R8.63 billion negative impact on the group’s reported headline losses, or 474 cents on reported headline losses per share.

The mobile operator said it incurred a cost of R1.324 billion ‘on a range of professional services’ relating to the negotiations that led to a reduction of R34 billion in the Nigerian regulatory fine to 330 billion naira (US$1,671 billion, using the exchange rate prevailing at the time).

Financial results snapshot for the six months ended 30 June 2016:

– Group subscribers remained flat at 232.6 million from 31 December 2015
– Revenue increased by 14.0% to R78.88 billion
– Data revenue increased by 32.2% to R19.85 billion
– Voice traffic and data traffic increased by 7.9% and 135.3% respectively
– EBITDA decreased by 3.3% to R29.273 billion
– Headline loss per share of 271 cents
– Interim dividend of 250 cents per share
– Nigeria regulatory fine re-measurement impact of R10.5 billion

Source: Business Tech 5 August 2016