N780bn Fine: Vodacom Overtakes MTN As Africa’s Largest Telco

MTN has continued to bear the brunt for its negligence to deactivate 5.2 million mobile lines in its Nigerian operation which led to a multibillion dollar fine as it this week lost its position as the most capitalised telecommunications company on the African continent to its rival Vodacom.
MTN lost its seven-year status as Africa’s highest valued telecom operator to Vodacom Group Ltd as its market capitalization came down 244 billion rand ($16.2 billion) while Vodacom was valued at 249 billion rand at the close of market on Wednesday at Johannesburg Stock Exchange (JSE) in South Africa.
MTN Nigeria was fined N1.04 trillion ($5.2 billion) in October 2015 by the Nigerian Communications Commission (NCC) for failure to deactivate unregistered subscriber lines, a directive given by the telecom regulator and the Nigerian security agencies aimed at fighting  insurgency.
In December last year, the fine was reduced by 25 per cent to N780 billion ($3.9 billion) after MTN pleaded for leniency from the Nigerian authorities. MTN’s shares have declined 31 percent since Oct. 26, when the Nigeria fine was made public while Vodacom has gained 12 per cent in the same period in its market value.
MTN, which had 229 million customers in 22 countries at the end of March, had revenue of 146 billion rand and net income of about 20 billion rand in 2015. Vodacom probably generated 82 billion rand in sales in the year through March, according to the average forecast of 14 analysts surveyed by Bloomberg, and net income of 13 billion rand. Vodacom reports full-year earnings on Monday. 
The impact of the fine on MTN’s market value forced out its then chief executive officer, Sifiso Dabengwa as well as MTN Nigeria CEO, Mike Ikpoki and Wale Goodluck, corporate services executive, also of MTN Nigeria.
MTN  had made an initial payment of N50 billion ($250 million) as well as withdrawing a court case it instituted against the Nigerian Communications Commission (NCC) and the Federal Government as part of agreement to resolve out of court, the fine imposed on it.
Meanwhile, efforts by executive chairman, Phutuma Nhleko, who replaced Danbgwa in a temporary capacity to resolve the Nigerian fine and find a suitable candidate as CEO for MTN Group within six months elapsed this week without success. Nhleko said a new CEO would be appointed before the end of June.
Nhleko took temporary charge of the telecoms giant on 9 November 2015, to fill the shoes of Dabengwa, who resigned two weeks after MTN announced it faced a $5.2 billion (R78 billion) penalty in Nigeria.

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