JSE suspends trade of MTN stocks

The suspension of MTN trade followed a report by Nigerian newspaper, Vanguard, on Monday morning claimed the telecoms giant had “bowed to pressure” and agreed to pay the full $5.2-billion fine levelled against it by the Nigerian Communications Commission last week.

Industry insiders, however, say the report is incorrect and that the amount payable was still subject to negotiation. The news nonetheless saw MTN share price dive into free fall when trading opened on the JSE this morning. According to Bloomberg, the shares fell as much as 8.6% to R144.20 in Johannesburg on Monday.

In a brief Sens (Stock Exchange News Service) announcement last week, MTN first informed the market about the fine, which related to timing of the disconnection of 5.1-million MTN Nigeria subscribers who were disconnected in August and September 2015 and is based on a fine of 200 000 Naira (currently equivalent to R13 600) for each unregistered subscriber. The news caused MTN to lose 14% of its market value in the subsequent 48 hours.

Because the news of the fine first broke many hours before MTN released the Sens, the company is under investigation by the JSE for possible insider trading.

With more than 62-million subscribers, MTN is the largest mobile operator in Nigeria which, in turn, is also MTN’s largest market. The company contributes significantly to Nigeria’s GDP and revenues. 

The fine of $5.2-billion (more than R70-billion) is significantly more than the R54-billion in revenues MTN earned in Nigeria in 2014.

Asked for comment, MTN Group spokesperson Chris Maroleng said: “We have taken note of the JSE’s decision to suspend trade in MTN securities. We refer all questions to the JSE”.

John Burke, director of issuer regulation at the JSE said: “The JSE has halted all trading on MTN Group Limited. Trading will resume as soon as MTN Group Limited has issued a Sens announcement.”

On Friday, MTN issued a cautionary note that the Group chief executive is engaging with the Nigerian authorities on the regulatory aspects of this matter. It advised shareholders to exercise caution when dealing in the company’s securities until a further announcement is made.

Update: MTN resumed trading on the JSE shortly after releasing a Sens to say the Group chief executive is engaging with the Nigerian authorities on the regulatory aspects of the matter and that shareholders are advised to exercise caution when dealing in the company’s securities until a further announcement is made. The share dipped to a low of R142 on Monday, as compared with Friday’s closing price of R157 per share.

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