MTN scores major win in terror case - and returns billions from Nigeria

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??MTN Nigeria mobile subscribers in the first half slipped to 68.9 million, down 9.9% from December 2020.
??MTN Nigeria mobile subscribers in the first half slipped to 68.9 million, down 9.9% from December 2020.
  • Despite warning that its half-year profit will decline, MTN's share price jumped 6% on Monday after good news for investors.
  • A US court recommended that a district judge dismiss a Afghanistan terrorism case, which involved MTN.
  • Also, the company managed to move cash stuck in its Nigeria operation back to South Africa.

Despite warning that its profit declined in the six months to end-June, MTN scored two major victories, which saw its share price jump 6% on Monday.

In a trading update for the six months to end-June, MTN announced that its headline profit will decline by between 5% and 15%. Its profit was hit by once-off items due to foreign exchange losses, and large Covid-19 donations.

But the market was encourage by the news that a magistrate judge in the US has recommended to a district judge to dismiss Afghanistan terrorism-related charges filed in the US.

MTN had filed a submission seeking to dismiss the US case, which accused the company of paying Taliban officials not to attack its operations in Afghanistan. The company said that the judge concluded that the court did not have jurisdiction over MTN.

"We welcome the recommendation by the magistrate judge to dismiss the case on the grounds of lack of jurisdiction as well as the complaint not alleging any conduct by MTN Afghanistan that violated the Anti-Terrorism Act," said MTN CEO Ralph Mupita. 

Nigerian money repatriated

In addition, MTN also announced on Monday that it had in the last reporting quarter finally repatriated approximately R9.3 billion in cash from its operating companies, including R4 billion from MTN Nigeria.

The released funds are expected to strengthen the company's financial position and settle debt.  

The company has been struggling to repatriate R4.3 billion in dividends from Nigeria due to challenges securing foreign currency in that country.

Nigerian results

Separately, MTN Nigeria released its results for the past half year, which showed that its service revenue increased by 24%, despite the number of its mobile subscribers declining by 7.6 million - nearly 10%.

In December 2020, Nigeria's authorities ordered mobile operators to verify the identities of all their clients, and to link mobile phone users with their identity numbers. No new SIM cards could be issued for months, until April this year. 

MTN said as at 26 July, nearly 37 million subscribers had submitted their national identification numbers (NINs) for verification. The numbers represent almost 54% of MTN Nigeria's subscriber base and 65% of service revenue. The deadline for NIN verification has been extended to 31 October 2021.

As a result of the regulatory crackdown, MTN's active data users were down 52 000 to 32.5 million. 

But while user numbers dipped, the company managed to increase service revenue by 24.1% year-on-year to 790.3 billion naira, (about R27 billion) driven by growth in data usage.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) shot up 27.6% to 417.2 billion naira. During the period, transaction volume for mobile money increased by 280.8% year-on-year to 55.6 million, with active subscribers hitting 6.1 million.

MTN Nigeria CEO Karl Toriola said the telecommunications giant aimed to sustain "double-digit service revenue growth ahead of inflation, driving 4G and rural network expansion".

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