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MTN warns of earnings loss

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MTN is finalising its financial results for the six months ended 30 June 2016, and will announce a loss per share when it announces its results tomorrow (5 August).
The group advises that it will report, for HY2016, a basic headline loss per share of between 285 cents and 255 cents and a basic loss per share of between 315 cents and 285 cents.
In the prior year comparable period MTN reported headline earnings per share of 654 cents and earnings per share of 653 cents.
The latest results have been negatively impacted the Nigerian regulatory fine which had a material impact on results for the period.
The income statement charge reflects the present value of the balance outstanding at 10 June 2016 of Naira 280-billion ($1,418-trillion), reduced by the reversal of the provision made in December 2015 of Naira 119,6-billion ($600-million). In total the net effect of the Nigerian regulatory fine on the current period was a negative impact of 474 cents per share (cps).
Results have also been affected by the depreciation of the rand and operating currencies against the US dollar, resulting in losses of 135 cps.
Losses from tower companies of 136 cps (largely impacted by foreign denominated loans), also contributed, as did increased short-term losses from the digital businesses (Africa Internet Holdings and Middle East Internet Holdings) when compared to the previous reporting period.
Hyperinflation adjustments in respect of MTN Irancell contributed, as well as higher professional services charges were also a drag in the period.
The underlying operational results for HY2016 were further affected by the under-performance of MTN Nigeria.
MTN Nigeria’s performance was impacted by the disconnection of 4,5-million subscribers in February 2016, the final batch of subscribers to be disconnected in compliance with the Nigerian Communications Commission subscriber registration requirements.
The withdrawal of regulatory services, which were re-instated on 15 March 2016 with approval for promotions and price plans granted in early May 2016, also negatively impacting MTN Nigeria’s performance.
The group also reported relatively weaker operational performance of MTN South Africa, which is expected to report a decline in earnings before interest, tax, depreciation and amortisation (EBITDA) margin, impacted by the marked increase in handsets sold during HY2016.
The basic loss per share was in addition impacted by impairment on property, plant and equipment in South Sudan, as well as goodwill impairments in Guinea Conakry and Afrihost Proprietary Limited.