MTN's impending fine leads to credit downgrades and scrutiny by the JSE

Earlier this week, MTN revealed that it was facing a multibillion dollar fine from the Nigerian telecommunications regulator.

Shares in the company have fallen for the past four days.

Now MTN has seen its credit rating downgraded and there's the chance the JSE will launch a probe into what's happened.

Let's take a closer look at what's going on…

The NCC fines MTN $5.2 billion

On Monday, shares in MTN [JSE:MTN] fell 12.5% as news broke that the company was facing a $5.2 billion fine from the Nigerian telecoms regulator. The fine relates to the timing of the disconnection of some 5.1 million Nigerian MTN subscribers.

The Nigerian Communications Commission (NCC) has now “set a November 16 deadline for MTN to pay the fine,” reports Fin24. Yet the CEO of MTN, Sifiso Dabengwa says that talks continue with the NCC over the fine.

MTN says the fine is “too extreme,” says MoneyWeb. The company is seeking to have the fine reduced or revoked.

MTN is the largest mobile phone operator in Nigeria, “with [a] 42% market share,” notes Bloomberg.

The knock-on effects continue for MTN…

The company could face a probe by the JSE down to the timing of its announcement about the fine, says BDLive. The JSE may want to determine whether MTN informed “the market timeously” about the fine from the NCC, “among other things”.

The developments of the week have led credit rate agencies Moody’s and Fitch to downgrade MTN’s credit rating, reports the SABC. This takes the company’s rating to “negative” as credit ratings agencies worry about “the potential impact” of the multibillion dollar fine.

Time will tell if MTN manages to get the NCC to reduce the fine that’s due for payment in just over two weeks. But it’s certainly not been a good week for MTN.


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