Trading in MTN shares was halted on the Johannesburg Stock Exchange, Monday, amid uncertainty over a $5.2 billion fine imposed by the Nigerian Communications Commission (NCC) for failing to comply with an order to disconnect customers with unregistered phone cards.
The bourse operator, JSE Ltd, said in a statement that trading in MTN’s shares were halted pending an announcement from the Johannesburg-based company.
The stock fell as much as 9.7 percent before paring losses and was the biggest decliner on the benchmark FTSE/JSE Africa All Share Index, according to data compiled by Bloomberg.
Trading was halted with the stock 5.3 percent down at R149.48 by 10.33am in Johannesburg. The securities have slid 22 percent since MTN said it’s facing the fine on October 26.
MTN failed to convince the NCC to lower its penalty, citing a company official familiar with the talks. MTN has not agreed to the fine and continues to meet with Nigerian authorities to challenge it, according to a source familiar with the matter, who asked not be identified because the matter is private.
Investors “were expecting something to come out at the weekend and it hasn’t and now the pressure is on because they’ve been told that they have to pay this fine by next week”, Rob Pietropaolo, a trader at Vunani Private Clients, said by phone from Johannesburg. “Because of their lack of communication, investors are punishing the share and obviously running for safety.”
MTN will release a statement later on Monday, Nik Kershaw, head of investor relations, said by phone. A statement will be released by the JSE, Pheliswa Mayekiso, a spokesman for the bourse, said by phone.
“Yes, trading in MTN shares has been suspended and the information was broadcast across the trading platform,” said Peter Redman of the exchange’s surveillance department.
One trader said the stock tumbled due to speculation the company has agreed to pay the fine.
“There has been some speculation that the company has agreed to pay the fine, but we really want to hear it from the company itself,” said Afrifocus securities portfolio manager, Ferdi Heyneke.
MTN spokesman Chris Maroleng declined to comment on the talks with regulators. MTN has been in talks with the government, but “I don’t have an update”, Tony Ojobo, a spokesman for the Nigerian Communications Commission, said by phone from Abuja, the capital. Vice-President Yemi Osinbajo’s spokesman, Laolu Akande, declined to comment immediately about the reports MTN met with the presidency.
The NCC, Friday, gave MTN Group two weeks to pay the fine.
Meanwhile, MTN Chief Executive Sifiso Dabengwa has flown to Abuja to try to negotiate a reduced penalty, sources close to the matter said.
Investors also hammered MTN debt with yields on company’s eurobonds soaring to all-time high on Monday. The yield on the paper due in 2024 climbed to a record 5.975 percent by 09h05 GMT. The yield on $750 million eurobond due in 2024 climbed 129 basis points in eight days.