The Telecoms firm, MTN Group, on Thursday announced its decision to cut its 2018 dividend as a means of cutting debt.
The firm, however, outlined increases in dividend in the next three to five years, a plan it described as a “progressive” dividend policy.
The company has been borrowing money over the last five years to fund its investment and dividends payment, its Chief Executive Officer, Rob Shuter, said when it announced its 2017 results.
“This policy would allow for the stabilisation of our gearing ratio,” he said.
Reuters reports Thursday that shares in Africa’s biggest mobile phone operator jumped as much as 13 per cent before easing to trade up 10.4 per cent at 135.40 rand, on track for its biggest daily gain in almost two years.
The company said it was cutting its 2018 dividend to 500 cents from 700 cents in 2017 but would use this year’s figure as a base to increase payouts by 10 to 20 per cent in the next three to five years.
Analysts have opined that the firm was going to suspend its dividends payment, due to other payments and fines the company continues to settle.
MTN reported a 3.3 billion rand profit for 2017––excluding one-off charges related to a $1.1 billion Nigerian fine––against 1.4 billion rand loss declared in 2016.
Group service revenue rose 7.2 per cent to 124 billion rand, due to strong performance in Nigeria, the company’s most lucrative market where it has also been embroiled in a dispute over repatriating funds and unregistered SIM cards.
In February, the Executive Vice Chairman of the Nigeria Communications Commission, Umar Danbatta, said MTN Nigeria has paid a total of N110 billion into the coffers of the government out of the N330 billion imposed on it.