MTN Nigeria update, Ghana licence granting

OK, very important news on the MTN front near the end of the market close yesterday. A SENS that I am going to copy and paste the important bits: "shareholders are advised that all factors having a bearing on the matter have been thoroughly and carefully considered including a review of the circumstances leading to the fine and the subsequent letters received from the Nigerian Communications Commission (NCC)." OK, as you would expect from the company, take legal advice and then proceed, what to do from here though?


They continue: "MTN Nigeria acting on legal advice has resolved that the manner of the imposition of the fine and the quantum thereof is not in accordance with the NCC's powers under the Nigerian Communications Act and therefore there are valid grounds upon which to challenge the fine." How? Like this: "Accordingly MTN has followed due process and has instructed its lawyers to proceed with an action in the Federal High Court in Lagos seeking the appropriate reliefs."


Whoa! Isn't that a turn for the something, is it better or worse for shareholders? And what about the relationship between them and the regulators? The release details that: "Notwithstanding this action the Company will continue to engage with the Nigerian Authorities to try and ensure an amicable resolution in the best interests of the Company, its stakeholders and the Nigerian Authorities."

How long this is likely to take, your guess is as good as mine. The Nigerian courts might be quick, experience always tells you that these matters take a long time. The market cheered the news, admittedly through the whole day, the stock was at the top of the leaderboards. It may have had to do with a SENS at the beginning of the session before the market opened, relating to the award of a LTE/4G licence in Ghana. MTN was declared the winner in an auction process and will now provide Ghanians with higher speed mobile internet. For having paid 67.5 million Dollars. As the release points out, data is growing like gangbusters in that country:


"Data revenue increased 78,6% year-on-year for the nine months period ended 30 September 2015 and contributed 28,7% to total revenue. For the same period the operation had approximately 3 million smartphones on its network."


So it is neither huge, nor is it small. What I found interesting is that in terms of the "eligibility criteria" for the licence, MTN Ghana have to have a minimum of 35 percent local ownership, i.e. Ghanaian shareholders, inside of the next 13 months. The release says that the company is exploring various options. I suspect that perhaps a local listing, or finding a single broad based shareholder would be the order of the day. We will see. Year to date, if you needed a reminder, MTN is down 37 percent. Yech. We continue to watch the Nigerian "situation" unfold, and continue to advise holding your shares.