South Africa’s biggest telecom giant just took a heavy hit. MTN Group’s share price slid nearly 9% intraday—closing 8.4% down—after news broke that the company is facing a U.S. Department of Justice grand jury investigation.
The probe zeroes in on MTN’s past operations in Afghanistan and its ongoing 49% stake in Irancell, the Iranian operator. MTN confirmed it was notified through its U.S. legal counsel and says it is fully cooperating. CEO Ralph Mupita, however, wouldn’t expand beyond the official statement.
Local Pressures Add More Heat
If that wasn’t enough, MTN also cut its South African revenue growth outlook. Originally forecasting mid-single-digit growth, the company has now downgraded to low- to mid-single-digit growth, blaming weak consumer spending, stiff competition, and pricing pressures in the local market.
Financial Picture: A Silver Lining
The financials weren’t all doom and gloom. MTN managed a sharp turnaround from last year’s loss, posting headline earnings per share (HEPS) of R6.45 in the six months to June—compared to a R2.56 loss in the same period last year. Group service revenue jumped 23.2% to R105.1 billion, with data usage (+36.5%) and fintech services (+37.3%)leading the charge.
The Bigger Picture
For investors and industry watchers, this is a classic case of good financials meeting bad headlines. MTN’s operational performance looks solid, but the U.S. probe injects a new level of uncertainty. Regulatory risks, especially when they involve U.S. authorities can linger for years and cast a long shadow over investor confidence.
