MTN Group Limited's subscriber numbers fell during the first quarter as disconnections ordered by the government in Nigeria, its biggest market, curbed the growth of Africa's largest wireless operator.
MTN's customer base decreased by 1.4 per cent to about 229 million across 22 countries in the three months through March, compared with the previous quarter, the Johannesburg-based company said in a statement on Thursday. The company cut its guidance for the full year to 11.95 million net additions from 12.5 million.
"In order to mitigate any future regulatory challenges, the group took an exceptionally conservative stance by disconnecting all subscribers who could possibly be deemed to be non-compliant," Bloomberg quoted its Executive Chairman, Phuthuma Nhleko to have said in the statement.
"This has had a significant unfavourable impact on total subscriber growth and revenue" in the first quarter.
MTN was fined a record $5.2 billion in Nigeria last year for missing a deadline to disconnect subscribers, whom the government had deemed unregistered amid a crackdown on security. The company is still in negotiations about settling the penalty, which was later reduced to $3.9 billion. Nhleko returned to the company he used to run in November to handle the dispute after Chief Executive Officer Sifiso Dabengwa resigned.
The shares declined as much as 2.7 per cent before reversing to trade 2.2 percent higher at 151.11 rand by 9:29 a.m. in Johannesburg, valuing the company at 277 billion rand ($19 billion). The stock has lost about 21 percent of its value since the Nigeria penalty was announced in October,
"We expected a drop in subscribers in Nigeria during the first quarter, even though the drop was bigger than expected," Arqaam Capital analyst Tibor Bokor said by phone from Dubai. "We expect that numbers in Nigeria will improve during the second quarter, as the political landscape has changed in the country."
MTN Nigeria subscribers decreased by 6.9 percent after 4.5 million customers were disconnected in February. In South Africa, the company's second-largest market, customer numbers fell by 1.7 percent.
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