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Blog: 9 February 2017 (MTN poor trading statement not unexpected)
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In today's blog we take a look at MTN's trading statement released yesterday (8 February 2017). And it doesn't look pretty. However the the bad news was not entirely unexpected as we all knew the MTN Nigeria fine imposed by the Nigeria authorities was going to have a serious negative effect on their reported earnings. Investors should remember, it is always darkest before dawn.
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MTN.. Always darkest before dawn
MTN's full announcement yesterday.
MTN is currently in the process of finalising its financial results for the year ended 31 December 2016 (FY2016) which will be announced on the Johannesburg Stock Exchange News Service on or about Thursday, 2 March 2017.
Paragraph 3.4(b) of the JSE Limited Listings Requirements require a trading statement to be published as soon as an issuer and its directors are satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported upon next will differ by at least 20%
from those of the previous corresponding period.
Shareholders are therefore advised that MTN expects to report a loss in basic headline earnings per share (HEPS) and basic earnings per share (EPS) for FY2016. In the prior year comparable period MTN reported HEPS of 1 204 cents and EPS of 746 cents.
The expected decline in the HEPS and EPS is mainly as a result of the regulatory fine imposed on MTN Nigeria (the Nigerian regulatory fine) following a resolution with the Federal Government of Nigeria on 10 June 2016. The Nigerian regulatory fine is expected to have an estimated negative impact of approximately 474 cents on HEPS and EPS, respectively.
Other contributing factors to the negative HEPS and EPS for FY2016 were foreign exchange losses in a number of operations, losses from joint ventures and associates, additional depreciation resulting from prior hyperinflation adjustments in MTN Irancell ,the Zakhele Futhi tax and share-based payment charges and professional fees incurred in respect of the settlement of the Nigeria regulatory fine and planned listing.
FY2016 results are further expected to be negatively impacted by the under-performance of MTN Nigeria and MTN South Africa in the first half of 2016. MTN Nigeria’s first half performance was impacted by the disconnection of 4,5 million subscribers in February 2016 in compliance with the .04Nigerian Communications Commission subscriber registration requirements. The withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the Naira against the USD also negatively impacted MTN Nigeria’s performance. Consolidated results in Rand terms from Nigeria were affected by the weaker Naira in the second half of the year. The disappointing results from MTN South Africa in the first six months, were largely due to the poor postpaid performance.
A further trading statement will be issued once the Company obtains a reasonable degree of certainty as to the likely range within which the HEPS and EPS are expected to be finalised. The financial information on which this trading statement is based has neither been reviewed nor reported on by MTN`s external auditors.
Below a breakdown of the big money spinning areas for MTN based on their latest available information.
MTN is currently in the process of finalising its financial results for the year ended 31 December 2016 (FY2016) which will be announced on the Johannesburg Stock Exchange News Service on or about Thursday, 2 March 2017.
Paragraph 3.4(b) of the JSE Limited Listings Requirements require a trading statement to be published as soon as an issuer and its directors are satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported upon next will differ by at least 20%
from those of the previous corresponding period.
Shareholders are therefore advised that MTN expects to report a loss in basic headline earnings per share (HEPS) and basic earnings per share (EPS) for FY2016. In the prior year comparable period MTN reported HEPS of 1 204 cents and EPS of 746 cents.
The expected decline in the HEPS and EPS is mainly as a result of the regulatory fine imposed on MTN Nigeria (the Nigerian regulatory fine) following a resolution with the Federal Government of Nigeria on 10 June 2016. The Nigerian regulatory fine is expected to have an estimated negative impact of approximately 474 cents on HEPS and EPS, respectively.
Other contributing factors to the negative HEPS and EPS for FY2016 were foreign exchange losses in a number of operations, losses from joint ventures and associates, additional depreciation resulting from prior hyperinflation adjustments in MTN Irancell ,the Zakhele Futhi tax and share-based payment charges and professional fees incurred in respect of the settlement of the Nigeria regulatory fine and planned listing.
FY2016 results are further expected to be negatively impacted by the under-performance of MTN Nigeria and MTN South Africa in the first half of 2016. MTN Nigeria’s first half performance was impacted by the disconnection of 4,5 million subscribers in February 2016 in compliance with the .04Nigerian Communications Commission subscriber registration requirements. The withdrawal of regulatory services, which was resolved in May 2016, the weak economy and the depreciation of the Naira against the USD also negatively impacted MTN Nigeria’s performance. Consolidated results in Rand terms from Nigeria were affected by the weaker Naira in the second half of the year. The disappointing results from MTN South Africa in the first six months, were largely due to the poor postpaid performance.
A further trading statement will be issued once the Company obtains a reasonable degree of certainty as to the likely range within which the HEPS and EPS are expected to be finalised. The financial information on which this trading statement is based has neither been reviewed nor reported on by MTN`s external auditors.
Below a breakdown of the big money spinning areas for MTN based on their latest available information.
If one assumes that the R12.04 in Headline earnings per share will be at least R4.74 lower due to the MTN Nigeria fine, and poor performance of MTN South Africa and Nigeria (and exchange rate losses) affects earnings by another 20%, MTN will report headline earnings per share of around R4.90 for the full year (placing them on a PE ratio of 23).
Below our interactive candlestick chart for MTN.
Users can change the colours, draw lines on chart, export it as image, or download the data used to obtain this chart.
Below our interactive candlestick chart for MTN.
Users can change the colours, draw lines on chart, export it as image, or download the data used to obtain this chart.
To change the colour of the graph select the colour from the dropdown box, then select if you want to change the negative or positive days. To download or draw lines on the graph, select the down arrow button at the bottom right of the graph. Click on show all to see the full share price history from January 2016. Note if you change the colour the graph zooms back to the last 90days to give users a better idea of what the colours look like when zoomed in.