Shares of African Telecoms giant, MTN Group, dipped to a five-month low a day after announcing estimated earnings growth that fell short of analysts’ projections.
Stock lost 5.41 percent to ZAR 7,900 in Johannesburg trading on Friday, the lowest it has traded since September 14, 2018.
The South African mobile-phone group Thursday released its earnings expectation for the year ended 31 December 2018, it expected to report an almost doubling of earnings with growth in full-year headline earnings per share forecast at between 80 percent and 90 percent.
The company’s earnings forecast lagged estimates of seven analysts polled by Refintiv, the former Financial and Risk business of Thomson Reuters – a global provider of financial markets data and infrastructure.
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Investors reacted negatively to the less than analysts’ profit guidance released by the telecom company as the group share price dropped on the Johannesburg stock exchange from ZAR 8,352 it opened the market with on Friday, March 1, 2019 to Zar 7,995. The lowest it has traded in 5 years after its September 2018 trade of ZAR 7,059.
Meanwhile, MTN noted in its profit guidance that headline earnings per share were negatively impacted by a number of once-off and non-cash items totalling approximately 220 cents.
The mobile-phone company is however encouraged that post the resolution with the Central Bank of Nigeria, MTN Nigeria “has resumed dividend payments to its shareholders.”
Rob Shuter, MTN Group President and CEO said “we are encouraged by the progress made and we are looking forward to sharing our full results on the 7 March 2019.”
The more than 22-year-old telecom company battled with the Nigerian authorities where it has its biggest market to pay a total claim of $10.1 billion over an alleged illegal repatriation of shareholders’ funds from the country and tax default, causing the company to lose 20 percent of its market value.
CBN reached an agreement with MTN on 24th December 2018 after the telecom company paid $53 million on the basis of new information received that showed no wrongdoing by the firm regarding most of the repatriations.
Although after the settlement with Nigeria regulators, investors cheered the news less than market analysts had expected.
The stock price of the Johannesburg-based wireless carrier increased marginally by only 1.16 percent after the news of settlement in December 24 2018. This was 21.13 percent less than its price of ZAR 10966 in August 28, when the company was hit with a fine.
“Market participants largely expected MTN would resolve its issues with the Nigerian authorities. The limited reaction in the aftermath suggests this was likely already priced in.” Rafiq Raji, chief economist at Macroafricaintel said.
