Moody's rating agency changed the outlook on MTN Group's credit ratings to negative on Thursday, citing the potential impact of a fine by the Nigerian telecoms regulator on the South African mobile operator's finances.
Shares in MTN have dropped 19 percent so far this week, hitting a year-low of 150.42 on Thursday after the Nigerian Communications Commission (NCC) on Monday imposed the penalty for failing to disconnect users with unregistered SIM cards.
"The change in outlook to negative from stable reflects the potential for deterioration in the group's credit metrics and liquidity profile if MTN has to pay the full equivalent $5.2 billion fine in Nigeria," Moody's Investors Service said in a note.
MTN, Africa's biggest mobile phone company, maintains Moody's Baa2 rating, or two notches above junk status.
story_article_left1
Though Moody's said MTN has sufficient headroom to absorb additional debt to pay the fine, it would reduce the company's financial flexibility to absorb other potential risks.
Nigeria is MTN's largest market and accounts for around a third of the firm's revenue. Sources have told Reuters that the company is in talks to try to reduce the fine.
Moody's said that the negotiations between MTN's Nigerian unit and the regulator are unlikely to be resolved quickly.
"A long negotiation process would put a strain on the relationship and interactions with the Nigerian telecoms regulator and disrupt business continuity which would have negative long term consequences on MTN's Nigerian operations," the rating agency said.
MTN shares were down 1.37 percent at 153.71 by 1258 GMT.
- Reuters
Just R20 for the first month. Support independent journalism by subscribing to our digital news package.