MTN on Thursday morning provided a breakdown of the interim headline loss it expects to report on Friday.

The cellphone network operator said it expected to report a fall into a headline loss per share for the six months to end-June of between R2.85 and R2.55 from the matching period’s headline earnings of R6.54.

MTN listed nine issues that contributed to its loss for the reporting period.

The biggest contributor, at R4.74 per share, was the portion of its Nigerian fine paid during the reporting period. On June 10, MTN announced it had reached a settlement with the Nigerian government, reducing its original $5.2bn fine to about $1.7bn (330-billion naira) and to be paid over three years.

MTN paid an initial 50-billion naira on February 24 and 30-billion naira was due by July 8.

The rand’s depreciation against the dollar cost it a further R1.35 per share in foreign exchange losses.

The weaker rand cost it an additional R1.36 per share in servicing foreign-denominated loans made to cellphone tower operators, the trading update said.

MTN said there were increased short-term losses from its internet service provider operations in Africa and the Middle East.

Its results also suffered from hyperinflation in Iran.

“Higher professional services charges were also a drag in the period.

“The underlying operational results for the first half of this financial year were further affected by the under-performance of MTN Nigeria,” the company said in a statement.

MTN Nigeria was fined for not disconnecting 4.5-million subscribers who could not be identified. MTN’s original fine was $1,000 for each of the 5.2-million subscribers it failed to identify as ordered by the Nigerian government in its drive to curb Boko Haram militants using cellphones.

Its Nigerian business also suffered from having its licence suspended.

Another factor was “the relatively weaker operational performance of MTN SA, which is expected to report a decline in its earnings before interest, tax, depreciation and amortisation (ebitda) margin” due to the marked increase in handsets sold during the reporting period. The company sells handsets at a discount to entice customers to take out contracts.

Earnings also suffered from impairment on property, plant and equipment in South Sudan as well as goodwill impairments in Guinea Conakry and its recent acquisition Afrihost.

•Sourced from Business Day South Africa.