MTN Posts Biggest Two-Day Decline Since January 2009 on Nigeria, Iran

Sikonathi Mantshantsha

MTN Group Ltd. (MTN), Africa’s biggest mobile-phone operator, posted its biggest two-day decline since January 2009 after Nigeria’s government removed fuel subsidies, cutting consumer spending power in the company’s largest market.

MTN fell (MTN) 7.55 rand, or 5.4 percent, to 132.06 rand by the close of trade in Johannesburg, taking its two-day decline to 8.3 percent. The company has a market value of 248.9 billion rand ($30.4 billion), making it the second-biggest South African company after Sasol Ltd.

“People will have to choose between buying phone airtime and paying for transportation” as fuel prices climb, said Khulekani Dlamini, head of research at Cape Town-based Afena Capital. The end of the subsidy “is the major issue” for the stock price, which is also being hurt by proposed sanctions against Iran’s nuclear program, he said.

Nigeria will proceed with ending fuel subsidies, Information Minister Labaran Maku told reporters in Abuja, the capital, yesterday. The nation’s president, Goodluck Jonathan, abolished 1.2 trillion naira ($7.5 billion) of subsidies on Jan. 1, promising to use savings to boost investment in power plants and roads in Africa’s most populous nation.

Ending the subsidy will double gasoline prices on the official market, and prices of other goods will climb because of the higher transportation costs, Dlamini said. “Transportation affects everything,” he said.

Indefinite Strike

Oil traded near the highest in eight weeks in London today on speculation that sanctions against Iran’s nuclear program will curb crude supplies.

Nigeria contributed 16.5 billion rand ($2 billion) to MTN’s total revenue of 56.5 billion rand in the first half through June, when the nation generated earnings before tax, interest, depreciation and amortization of 10.48 billion rand, 42 percent of MTN’s total Ebitda.

MTN Irancell, the company’s Iranian unit, contributed 5 billion rand in revenue and 2.1 billion rand in Ebitda.

Nigerian workers will begin an indefinite strike from Jan. 9 against the scrapping of fuel subsidies in Africa’s largest oil producer, labor unions said.

The Nigerian Labor Congress and Trade Union Congress are willing to hold talks only after the government reverses its action, Peter Esele, president of the TUC, told reporters in Lagos yesterday. The strike will shut ports, fuel stations, banks and oil operations, NLC President Abdulwahed Omar said at a press conference in Abuja.

Protesters marched in the market district of Yaba in Lagos on Jan. 3 as long lines of cars formed at gas stations. Hundreds of students and activists in the northern city of Kano protested for a third day yesterday, barricading roads.

MTN on Jan. 4 announced plans to invest $1 billion in its Nigerian network this year, after spending the same amount in 2011.

The company is the largest mobile operator in Nigeria, where it had more than 40 million subscribers in June 2011, according to the National Communications Commission, the country’s regulator.