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MTN shares plunge after Nigerian regulator fines the telecoms firm $5.2 billion

by , 27 October 2015

Yesterday, the Nigerian communications regulator revealed it was fining MTN a whopping $5.2 billion. This led shares in MTN to fall sharply.

The fine relates to MTN not disconnecting subscribers using unregistered SIM cards.

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


MTN shares fell sharply on news of the fine


Shares in MTN [JSE:MTN] fell “the most in nearly 17 years,” reports IOL. This was thanks to Nigeria’s communication regulator fining MTN $5.2 billion (R71 billion).

The fine relates to MTN reportedly failing “to disconnect customers with unregistered SIM cards,” says BDLive. The Nigerian Communications Commissions (NCC) “requires mobile network operators to register all customers in a bid to curb crime”.

MTN now plans to enter discussions with the NCC over the hefty fine, says Bloomberg. This should happen tomorrow.

MTN says “the fine relates to the timing of more than 5 million subscribers’ disconnections in August and September,” adds Bloomberg.

Tony Ojobo, the director of public affairs at the NCC, said that “all telecom firms operating in Nigeria except MTN had complied with the directive,” notes the SABC. He adds that “they had enough time to do” it.


The fine MTN is facing accounts for more than 20% of its market cap


As Petri Redelinghuys, a trader with Inkhunzi Investments points out, “the fine is massive,” adds the SABC. At current exchange rates, it works out at “more than a fifth of the company’s market value”.

This may go some way in explaining the sharp drop in the price of MTN shares yesterday. You can see the fall on the chart below…


Chart of MTN's share price


Shares fell 12.5% to close at R167 a share, notes MoneyWeb.

At time of writing, MTN shares were trading 1.75% lower at R164.07.

Time will tell if the NCC imposes the fine on MTN and the impact on MTN if it does.

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MTN shares plunge after Nigerian regulator fines the telecoms firm $5.2 billion
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