MTN shares plunge amid South African pain

MTN’s shares plunged after revenue at its South African unit fell, prompting the continent’s biggest mobile-phone operator to revamp its management. 

The shares fell as much 10% in Johannesburg — the most since March 2023 — before paring some of those losses. Investors were also concerned about the US Department of Justice probing the company’s unit in Iran as well as its former subsidiary in Afghanistan. 

The Johannesburg-based wireless carrier appointed Ferdi Moolman to succeed Charles Molapisi as the company’s South Africa chief executive officer and named Yolanda Cuba as deputy CEO, according to a statement on Monday.

It’s also expanding the role of Chief Financial Officer Tsholofelo Molefe to include mergers and acquisitions.

The company has been trying to boost growth in Africa’s biggest economy and was in talks to buy Telkom before walking away from the discussions three years ago.

The Nigerian business, where revenue jumped 37.5% to R28.4 billion in the six months to June 30, is now bigger than the South Africa unit.

Group CEO Ralph Mupita has set a three-year target to revive the homegrown business, which saw a 3.7% drop in sales.

“The new news on the day is mostly negative,” said Bloomberg Intelligence analyst John Davies. Investors are concerned about the “South Africa guidance cut as the prepaid market remains tough and further details about US investigations over past practices in Iran and Afghanistan,” he said. 

MTN said it owns a minority 49% stake in Irancell. The company sold its stake in the Afghanistan unit in 2022. 

“A lot of these things are legacy issues and we have to spend time to defend ourselves,” Mupita said at a briefing. 

In a separate interview with Bloomberg Television, Mupita also said that too many operators in South Africa reduce the “profit pool.”

Meanwhile, MTN’s cross-town rival, Vodacom earlier this month got regulatory approval to acquire the fiber assets of Remgro. 

MTN posted a net income of R9.75 billion in the six months to June 30. It had reported a loss of R7.39 billion in the same period last year because of currency depreciations in Nigeria and Ghana. 

MTN said it has also streamlined the focus of the group to build three platforms including connectivity, fintech and digital infrastructure.

“We have been running a strategy of de-coupling some of the digital infrastructure assets,” Mupita said in the statement. “The process of carve-outs, we will continue to progress with that as part of our strategy.”