Telecom giant MTN’s earnings plunge over Nigeria fine

South African telecoms giant MTN said Thursday that headline earnings last year fell by 51 percent, weighed down by $600 million it put aside to cover a huge fine imposed by Nigeria.

Without counting the fine, earnings were down 14 percent, chief executive Phuthuma Nhleko said.

MTN’s Nigeria operation was slapped with a $3.9 billion penalty in October 2015 for failure to disconnect 5.1 million unregistered SIM cards.

The company said it had made provision of 9.2 million rand ($594 million) toward the fine.

It has so far paid out $250 million to the Nigerian government as it tries to negotiate a settlement.

The company said it had agreed to withdraw its legal challenge over the fine in the Lagos High Court, to enable the two parties to try to reach an agreement.

“We are working as urgently as we can to get an amicable solution of this matter,” Nhleko said.

The MTN share price on the Johannesburg stock exchange rose seven percent after the announcement of the company results compared to the close on Wednesday.

Nigerian authorities ordered unregistered SIM cards to be deactivated for security reasons, as the country battles Boko Haram Islamists as well as criminality, especially kidnapping for ransom.

Nigeria, Africa’s most populous country, is MTN’s largest market, where it now has 61.3 million subscribers out of a total of 232.5 million.

Nhleko said 2015 was “an exceptionally difficult year for the company — I will probably say the most difficult year it has ever experienced in its 21-year history”.

During the year, MTN had to disconnect 10 million subscribers — 6.7 million of them in Nigeria and 3.7 million in Uganda.