2016 was definitely a challenging year for MTN Group after the announcement of a $1 billion regulatory fine in Nigeria and other struggles in the market, as well as at home in South Africa that contributed to an overall loss for the whole year.
In a trading statement released on the Johannesburg stock exchange ahead of its official financial results statement on 2 March, MTN said it expects to be in the red for 2016. The extent of the loss is not yet known, but MTN said it would release another trading statement with more details.
Nigeria, where the company is the largest operator, proved particularly challenging last year. The company was originally hit with a fine of $5.2 billion in Nigeria after failing to cut off unregistered SIM cards from its network in 2015 in accordance with new laws in the country to crackdown on crime and terrorism. Few months after that, shareholders were informed that MTN had received a formal letter dated 2 December 2015 from the NCC informing the company that, after considering the company's request, it had taken the decision to reduce the fine imposed on the MTN Nigerian business. Reduced from the original N1,040,000,000,000 (one trillion, forty billion naira) (the original fine) to 674 billion naira, the fine had to be paid by 31 December 2015. This was a reduction of 35 percent of the original fine.
Later on 3 December 2015, the company received a further letter from the NCC dated 3 December 2015. The second letter, which was stated to supersede the first letter, informed the company that the fine had actually been reduced by 25 percent to 780 Billion Naira and not by 35 percent to 674 Billion Naira, as was stated in the first letter. The payment date remained 31 December 2015, knowing that neither the first letter nor the second letter sets out any details on how the reduction was determined.
That situation saw the departure of CEO Sifiso Dabengwa, with group chairman, Phutuma Nheklo taking temporary charge. Back then, the company was carefully considering both the first letter and the second letter, while Phuthuma Nhleko re-engaged with the Nigerian Authorities before responding formally, as it was essential for the company to follow due process to ensure the best outcome for the company, its stakeholders and the Nigerian authorities. As a consequence, it eventually settled to pay $1.67 billion on 10 June last year, after long-running negotiations with the country's regulator.
In addition to that, a new permanent CEO, Rob Shuter is set to start in the role next month.
Moreover, adding to the fine, MTN said it was hit by under-performance of MTN Nigeria and MTN South Africa in the first half of 2016.
New laws imposed by Nigerian regulators over subscriber registration meant 4.5 million of its customers were disconnected in February 2016.
It was also impacted by a weak economy and depreciation of the naira against the US dollar, and charges incurred for a planned listing in the country.
In South Africa, the company said it had disappointing results due to poor postpaid performance.
Other contributing factors to its struggles were foreign exchange losses in a number of operations, losses from joint ventures and associations, as well as other tax and charges.
Its Nigeria struggles are also far from over. MTN is currently being investigated for illegally repatriating $14 billion from the country, between 2006 and 2016.