MTN is fined $5.2 billion for non-compliance

If you were holding shares in Africa's biggest mobile telecommunication network chances are you felt pretty much like Theo Reinecke who has posted a humorous picture showing what his position looked like after the price fell to a two month low on the back of an announcement made by the NCC (Nigerian Communication Commission) fining the telecom due to non-compliance with regulations by failing to disconnect unregistered subscribers.

The range of today's price action spanned between the high of 19295c hitting a low of 16123c until it eventually settled on 16644c at the close.  

This was the view from the top of my $JSEMTN long this morning... #JSE #Trading #Equities pic.twitter.com/DxxqiWKe5V

— Theo Reinecke (@ReineckeTheo) October 26, 2015

To add insult to injury the company failed to disclose this fact to shareholders on it's main board listing on the JSE resulting in a flood of tweets from disgruntled shareholders demanding more transparency. The news broke in Nigeria earlier in the day but could not be confirmed until management sent out a security exchange announcement at 2:00 pm South African time.

All the while rumours flew around with flat panic as to what to make of the whole story as the stock began to tumble. Once confirmed the price plunged even further probably based on the dissatisfaction felt by shareholders.

MTN The Nigerian Communications Commission (NCC) imposes fine on MTN Nigeria https://t.co/n3LyhDjJwa

— JSE_SENS (@JSE_SENS) October 26, 2015

Simon Brown, founder and contributor of JustOneLap had this to say about today's news:

Sold MTN shares I have owned since about 600c .. But as shareholder I want more respect from management #JSE https://t.co/0cklpBHmCx

— Simon Brown (@SimonPB) October 26, 2015

To show the extent of the fine Wayne McCurrie, portfolio manager at Momentum Wealth indicated that the fine could have a crippling effect on the business that has made massive strides in building itself over the decades especially in Nigeria.

MTN- this is a massive fine probably equates roughly to 3 years earnings in total and also +- the value of the complete Nigerian business

— Wayne McCurrie (@WayneMcCurrie) October 26, 2015

In my opinion I think we have once again seen a failure by top management in informing the market promptly when and if information, positive or negative, becomes known to them. I question the intention of management's action to not inform its shareholders. Where is the accountability?

The way in which they've handled the situation is atrocious to say the least leaving them with a barrage of questions that will be thrown at them at the shareholders meeting. Yet we've seen more than one occassion like this slip up with little to no action.

One incident that comes to mind is Pinnacle Technology when management failed to tell shareholders that one of the company's directors had been arrested for fraud involving a tender it had won. The director was cleared of any wrongdoing but judging what the negative press has done for the stock's price since that happen one can see there are issues of trust that have been abused and it's resulted in the stock being ignored.

If the JSE wants to retain and build interest from the public in trading and investing on the stock exchange it needs to make sure that these occurrences happen infrequently so as to build confidence in putting one's capital to good use knowing that it is protected by rules that hold management accountable.