It has been two years since MTN's multibillion-rand regulatory fine in Nigeria was first announced, and despite a settlement being reached over a year ago, the fine fallout lingers. However, not all the effects have been bad.

The worst hit: the JSE-listed company's share price and earnings over the past two years. More knock-on consequences are sure to be felt, with the full fine amount only due to be paid off in May 2019.

"It's been a major blow to MTN, both financially and reputation-wise. It stripped several years' profit from its Nigerian operation, and created a gulf of distrust between it and the government there. However, it also forced MTN to take governance far more seriously, and it has probably become a more solidly run organisation as a result," says Arthur Goldstuck, MD of World Wide Worx.

Denis Smit, consulting director at BMI-TechKnowledge, says the fine "massively damaged investor confidence".

Right before the fine was announced, the MTN share price was trading at around R190 per share, but over the past two years has declined around 35% to its close of R123.20 per share yesterday. However, over the past year, the share price has actually increased by 13% and the company's market cap is now worth R232 billion.

The road so far

On 26 October 2015, MTN announced it was facing a $5.2 billion (R71 billion at the time) fine from the Nigerian Communications Commission (NCC). This after the telco failed to meet a deadline to disconnect 5.1 million unregistered SIM cards on its Nigerian network.

In early December 2015, the NCC reduced the fine to $3.4 billion (R51 billion) but the following day backtracked and raised it to $3.9 billion (R59 billion).

On 10 June 2016, MTN finally reached an agreement with the NCC and promised to pay 330 billion naira over three years ? the equivalent of $1.671 billion or R25.1 billion at the time. MTN had already made a N50 billion ($250 million; R3.8 billion) "good faith payment" in February 2016 and subsequently made another two payments of N30 billion each on 8 July 2016 and 31 March 2017.

So far, the group has not even paid half of the fine and still owes N220 billion, to be paid in four N55 billion instalments on 31 March 2018, 31 December 2018, 31 March 2019 and 31 May 2019.

MTN group CEO Sifiso Dabengwa resigned two weeks after MTN broke the news of the fine and group executive chairman Phuthuma Nhleko took the reins for the next 18 months. New group CEO Rob Shuter took over in March 2017.

George Kalebaila, director for telecoms and Internet of things in Africa at IDC, believes that overall MTN has survived the fine "better than expected".

"A fine of that magnitude was always going to have some impact on any organisation, especially that it came at the time the Nigerian economy was just entering recession at the back of lower oil prices, foreign currency shortages and volatile local currency.

"The share price has rebounded and although challenges remain, these are not specifically due to the fine; they're more to do with a broader macro-economic environment affecting the market," Kalebaila says.

Africa Analysis MD Dobek Pater says the financial impact has been felt as the group reported lower profitability, but believes the group "can absorb this over time".

2015 was described as "an exceptionally difficult year for the company" by Nhleko, and its results for the year ended 31 December 2015 were hard hit by the fine which was still pending at that stage. Basic headline earnings per share (HEPS) declined by 51.4% to 746c, largely due to the looming fine, and group revenue was flat at R146.4 billion.

A year later, the group was still feeling the impact of the fine and the year ended 31 December 2016 was described as "the most challenging year in the company's 22-year history". The telco reported a full-year headline loss per share of 77c and revenue increased just 0.4% to R146.9 billion.

However, the group has begun to show signs of recovery and the interim results for the six months ended 30 June 2017 saw group HEPS swing back to a profit of 217cps, despite losing overall subscribers.

In recovery

"MTN has bounced back, although still injured, but doesn't appear to be limping too much. The fact that it has seen revenue growth in Nigeria tells us that it has steadied the ship there," says Goldstuck. Pater agrees MTN is "on its way to financial improvement".

Analysts are, however, split on how much impact the fine had on MTN's brand and reputation.

"It has made some progress but I believe that rebuilding the brand will take much more time," according to Smit.

Goldstuck believes the fine was a major blow to MTN's reputation but Pater does not think it really suffered much in terms of reputation from the fine fallout.

"The brand image, though in some way under question, has largely remained intact in part because of the way MTN moved to quickly isolate the executives involved and Phuthuma Nhleko's excellent leadership," says Kalebaila.

"Suffice to say that MTN's experience in operating in tough regulatory and market environments in other countries such as Iran, Sudan and Syria came to bear in dealing with the Nigeria debacle and lessons have clearly been learnt which are sure not to be repeated again, at least in the near future."

The bright side

Analysts agree some positives have come out of the whole saga, especially improved corporate governance from the telco.

Pater says the good changes that have been seen include the executive management refreshment and "implementation of stricter internal processes and 'policing' measures to ensure there is less transgression of good practice in the future than has been in the past".

"The biggest benefit of the fine is not only that MTN no longer behaves as a law unto itself, but also that other operators have become far more conscious of their responsibility as corporate citizens. They are all forced to take governance more seriously," says Goldstuck.

"Although they will keep looking for loopholes and will continue to take chances with customer trust in order to maximise margins, they are now all looking over their shoulders for unwanted government or regulatory attention. This is doing them a favour, as it prepares them for an upcoming rise in consumer activism and demand, that will be every bit as challenging as government intervention," he adds.

Kalebaila agrees the fine has had some positive effect in helping MTN re-align its strategy and improve corporate governance structure and processes.

"From here, it seems it is well positioned to respond better to the tough market environment that all telcos are operating under and find opportunities in other areas, especially in digital services such as financial services, Internet of things, digital content and entertainment," Kalebaila adds.

He says the issues in Nigeria also seemed to allow the MTN group to focus on SA more than in the past.

"Seems MTN SA has emerged from the shadow of MTN Nigeria. Though Nigeria will continue to be a key market for MTN, SA is now fully back on the agenda."