MTN Group Limited, Africa’s biggest mobile-phone operator, posted its biggest two-day decline since January 2009 after the Nigerian government removed fuel subsidy, cutting consumer spending power in the company’s largest market.
MTN fell 7.55 rand, or 5.4 per cent, to 132.06 rand by the close of trade in Johannesburg, taking its two-day decline to 8.3 per cent. 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 programme,” he said.
Nigeria contributed 16.5 billion rand ($2 billion) to MTN’s total revenue of 56.5 billion rand in the first half through June, about a third of the group’s total revenue, when the nation generated earnings before tax, interest, depreciation and amortisation (Ebitda) 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, over eight per cent of total revenue and 2.1 billion rand in Ebitda.
Nigeria will proceed with ending fuel subsidies, Information Minister, Labaran Maku told reporters in Abuja, yesterday. The nation’s president, Goodluck Jonathan, abolished N1.2 trillion ($7.5 billion) of subsidies on January 1, 2012, promising to use savings to boost investment in power plants and roads.
Ending the subsidy will more than double petrol 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.
MTN shares were the most traded by value yesterday in Johannesburg with 2.4 billion rand of stock changing hands, almost five times the volume of trade in BHP Billiton, the second-most traded stock.
Oil traded near the highest in eight weeks in London yesterday on speculation that sanctions against Iran’s nuclear programme will curb crude supplies.
Nigerian workers will begin an indefinite strike from January 9, 2012 against the scrapping of fuel subsidies in Africa’s largest oil producer, labour unions said.
The Nigerian Labour Congress (NLC) and Trade Union Congress (TUC) are willing to hold talks only after the government reverses its action, Peter Esele, President of the TUC, told reporters in Lagos. The strike will shut ports, fuel stations, banks and oil operations, NLC President Abdulwahed Omar said at a press conference in Abuja.