MTN takes major pain

MTN has released a trading statement for the six months ended 30 June 2021 to notify shareholders about a major drop in expected earnings for the company.

The company said it is expecting a decrease in earnings per share of between 75% and 85% — or R5.06 to R5.73 — down from the earnings per share of R6.74 for the corresponding six-month period ended 30 June 2020.

MTN explained that the earnings per share includes impairment losses totalling approximately 75 cents (2020: 99 cents) that relate mainly to MTN Yemen.

These are largely non-cash losses from the deconsolidation of subsidiary MTN Syria of approximately 262 cents (2020: 0 cents) and a gain on the fair value uplift on consolidation of the Group’s equity accounted investment in aYo of 96 cents (2020: 341 cents gain from disposal of ATC Uganda and ATC Ghana tower joint ventures).

MTN said that it has made meaningful progress in strengthening its financial position, maintaining a healthy liquidity position and faster de-leveraging of the holding company balance sheet.

“This has been supported by upstreaming of approximately R9.3 billion in cash from its operating companies, including R4.0 billion from MTN Nigeria, in the six months to 30 June 2021,” MTN stated.

It said that it has received a further R700 million in cash from Nigeria after 30 June.

MTN also reported that a magistrate has recommended to dismiss a case brought against two of its overseas operations for allegedly supporting the Taliban by making payments to the terrorist group to ensure the protection of its infrastructure.

The civil damages case was brought against MTN Dubai and MTN Afghanistan, and MTN filed a motion to dismiss the case in 2020.

MTN said it requested that the court dismiss the complaint for two independent reasons:

  1. The court lacks jurisdiction over MTN Dubai and MTN Afghanistan
  2. The complaint does not allege any conduct by MTN Dubai or MTN Afghanistan that violated the US Anti-Terrorism Act.

“MTN is pleased to report that on Friday evening, 30 July 2021, the magistrate judge to whom the case had been referred made a recommendation to the district judge presiding over the case to grant the motion to dismiss for all defendants in the case,” the company said.

“The magistrate judge further concluded that the court did not have jurisdiction,” it said.

MTN noted that under the US court’s procedures, the plaintiffs are permitted to file objections to the report with the district judge, and MTN Dubai and MTN Afhanistan will have an opportunity to respond.

“MTN is in the process of studying the full report with its legal counsel, however, the company is pleased with this positive development supporting MTN’s strong defence and arguments with regards to its motion to dismiss.”

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MTN takes major pain