Picture: BLOOMBERG
Picture: BLOOMBERG

MTN says it expects to report a return to profit for the 2017 financial year after a $1.5bn fine in Nigeria and other one-offs dragged the group to a loss in the previous year.

Analysts said a profit had been expected, though the market was waiting for more clarity before MTN published its results in early March.

On Monday MTN said headline earnings per share would rise by at least 20% and earnings were likely to be positive.

The group recorded a headline loss per share of 77c for 2016, largely because of the fine in Nigeria and losses from its 51% stake in Nigerian tower company IHS Holdings.

Momentum SP Reid analyst Sibonginkosi Nyanga said while MTN was likely to return to growth, it was unlikely to grow as fast as it had in the past.

"The new management team has come from a banking environment and I expect them to be cautious when it comes to growing the business," he said.

CEO Rob Shuter has previously held executive roles at Vodafone, Nedbank and Standard Bank, while finance chief Ralph Mupita was head of Old Mutual Emerging Markets.

"They will probably want to stabilise it before anything else and I don’t think we’ll see the growth we saw when MTN was venturing into Africa. I don’t expect double-digit growth anytime soon," said Nyanga.

But he said if MTN’s results showed a "positive trend", the share price could rerate.

In line with a broader selloff in the telecommunications sector, shares in MTN lost 1.27% to close at R133.04 on Monday. The stock has retreated from a high of more than R260 in 2014.

Sentio Capital portfolio manager Imtiaz Suliman said the market was awaiting an update on MTN’s dividend policy.

The group is expected to pay a dividend of R7 a share for 2017, although a revised policy is likely to be announced with the results in March.

"It will probably be a percentage of headline earnings from here on, that’s my guess," Suliman said.

The outlook for MTN’s biggest markets – Nigeria, SA and Iran – had improved, although this was largely priced into the share, he said.

"From a valuation perspective, our preference is Vodacom. On a p:e [price:earnings ratio] basis it’s cheaper and you’re getting very good stable growth from Vodacom without the currency volatility one gets with MTN," said Suliman.

Shuter said earlier in January the group was "quite positive about the economic situation in the markets" where it operated.

hedleyn@businesslive.co.za