MTN has measured the impact of the Nigeria regulatory fine re-measurement at R10,5 billion, according to its consolidated interim financial results for the six months ended 30 June 2016. This factor, alongside what the company described as "the confluence of a number of material issues" -including the depreciation of local currencies against the US dollar – has impacted the company's performance.

A snapshot of its results shows a headline loss per share of 271 cents, an interim dividend of 250 cents per share, a drop of 3.3% in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation), and a decrease of 6,6% percentage points on EBITDA margin.

In a statement the company confirmed its results were significantly impacted by the Nigerian regulatory fine.

The company explained that on 10 June MTN Nigeria resolved the matter with the Federal Government of Nigeria (FGN) and agreed to pay the FGN a total cash amount of 330 billion Nigerian naira (US$1,671 billion, using the exchange rate prevailing at the time) over three years in a full and final settlement.

"This was agreed in addition to complying with certain other regulatory conditions imposed as part of the settlement reached. The 50 billion naira (US$250 million) paid in good faith and without prejudice by MTN Nigeria on 24 February 2016 forms part of the monetary component of the settlement, leaving a balance of 280 billion naira (US$1,418 billion, using the exchange rate prevailing at the time) outstanding. In June 2016 the first scheduled payment of 30 billion naira (US$124 million) was made. The remaining cash payable at 30 June 2016 amounted to 250 billion naira (US$882 million)," the company's statement reads.

Cash flow

However, the fine represents a negative impact of R10 499 million on EBITDA and a R8 632 million negative impact on the Group's reported headline losses, or 474 cents on reported headline losses per share.

"The reported impact on the Group's statement of cash flow for the period amounted to R5 870 million, which equates to the 80 billion naira paid during the period. During the period, R1 324 million costs were incurred on a range of professional services relating to the negotiations that led to a reduction of R34 billion in the Nigerian regulatory fine to 330 billion naira (US$1,671 billion, using the exchange rate prevailing at the time). The board has exercised its judgement and approved the quantum of the professional fees incurred taking into account global benchmarks and the value delivered culminating in the final settlement of the Nigerian fine," the company stated.

Other factors impacting on its performance included foreign exchange losses amounting to R3 606 million, as well as impairment on property, plant and equipment reported by MTN South Sudan at an amount of R259 million (based on a Rand/Sudanese pound exchange rate of 0.376).

Furthermore, the company added that its underlying performance was impacted by weak macro-economic conditions affecting consumer spending, the withdrawal of regulatory services in MTN Nigeria from July 2015 until May 2016, and disconnections of subscribers related to subscriber registration requirements.

"MTN Nigeria disconnected the last batch of 4,5 million subscribers in February 2016. MTN Uganda and MTN Cameroon were also impacted by subscriber registration requirements. This resulted in significant free minutes provided for subscriber re-registration campaigns, contributing to a 12,2% decline in the effective voice tariff. The Group's performance was further impacted by aggressive price competition and under-performance of MTN South Africa," the company explained.

Back in May this year MTN Group COO Jyoti Desai spoke of the 'colossal damage' caused by the fine.

"I think if you look at the quantum of the fine, it's just ginormous by any standard... I don't think anyone in the market can digest the number that has been put forward, so it's bound to do some damage to the share price. When one looks at the fact that many of the subscribers who are not properly registered don't even contribute that much in one year of outpour... a thousand dollars, you know, it does have a significantly damaging effect because we have a wide expanse of customers in Nigeria... we are inclusive in terms of all sectors of the economy," said Desai.