Research Update: South Africa-Based MTN Group Ltd. 'BB+' Ratings Remain On CreditWatch Negative

We continue to see uncertainty as to the impact on MTN Group from allegations against its subsidiary MTN Nigeria Communications Ltd. by the Central Bank of Nigeria of improper dividend repatriation and by the Nigeria Attorney General of unpaid taxes on foreign payments and imports. MTN Nigeria represented about 30% of EBITDA for its parent in 2017. We also note that the group's consolidated South African rand revenues and EBITDA are likely to see marginally negative growth in 2018, due to solid subscriber and data revenue growth being offset by negative foreign currency movements. We expect the group's adjusted debt to EBTIDA to remain well below 3x and adjusted funds from operations to debt of around 30%, assuming no material

...+ We continue to see uncertainty as to the impact on MTN Group from allegations against its subsidiary MTN Nigeria Communications Ltd. by the Central Bank of Nigeria of improper dividend repatriation and by the Nigeria Attorney General of unpaid taxes on foreign payments and imports. MTN Nigeria represented about 30% of EBITDA for its parent in 2017. + We also note that the group's consolidated South African rand revenues and EBITDA are likely to see marginally negative growth in 2018, due to solid subscriber and data revenue growth being offset by negative foreign currency movements. + We expect the group's adjusted debt to EBTIDA to remain well below 3x and adjusted funds from operations to debt of around 30%, assuming no material negative outcomes related to the allegations. + We are therefore keeping our '##+' issuer credit ratings on MTN Group on CreditWatch with negative implications. + The CreditWatch reflects that we could lower the ratings by one or more notches if we believe that...

Research Update