MTN’s share price dropped as much as 11% on Monday, hit by a number of factors including going ex-dividend and problems refinancing debt in its biggest market, Nigeria, along with a plunge in oil prices.
MTN closed 7.84% lower at R167.74.
Farai Mapfinya, head of equities at JM Busha, said these factors dragged MTN down more than most stocks in Monday’s global rout, making it the worst performer in the JSE’s top 40 index, which fell 2.89%.
Bloomberg reported MTN was unable to arrange the early repayment of about $500m of debt held in Nigeria, due to a lack of hard currency available in the country.
MTN said earlier this month it was in talks with Nigeria’s central bank about the early repayment of borrowings to reduce exposure to the naira, which has weakened against the US dollar this year.
“We had looked to do the early resettlement but currently we are not able to,” Nik Kershaw, MTN Group head of investor relations, said. “In Nigeria there is limited availability of the hard currency.”
Declines against the dollar in emerging market currencies, including the rand, would negatively affect the business, said Mr Kershaw. The cost of importing handsets into SA could rise, for example, costing the consumer more. MTN sees the naira deteriorating further, said Mr Kershaw.
Meanwhile, MTN has entered into a partnership with Liquid Telecom that will enable the companies to access to each other’s fixed and wireless networks in countries on the African continent, where one party may not have presence. The agreement enables MTN to service its multinational enterprise customers in Burundi, Democratic Republic of Congo, Tanzania and Zimbabwe.
Liquid Telecom’s fibre network spans 20,000km across Burundi, Congo, Kenya, Rwanda, SA, Tanzania, Uganda, Zambia and Zimbabwe. The network is also complemented by its satellite service for rural areas.