Jim Chanos, founder and managing partner of Kynikos Associates, said he’s shorting Africa’s largest wireless operator, MTN Group, as demand for services in its biggest markets is being hurt by falling commodity prices.

The Johannesburg-based company gets more than 60% of its sales from Nigeria, East Africa and South Africa, where declining oil and metals prices have slowed economic growth. Subscriber numbers have fallen in both countries, exacerbated by a government order to disconnect customers in Nigeria, its biggest market. There, the company is facing pressure from cash-strapped authorities looking for funds through fines, the hedge fund manager said on Wednesday at the Sohn Investment Conference in New York.

“Nigeria is a borderline failed state in our view,” said Chanos, who predicted the 2001 collapse of Enron Corporation. Profits to MTN shareholders could be “eviscerated” by about 50%, he said.

MTN was fined a record $5.2 billion in Nigeria last year for missing a deadline to disconnect subscribers, whom the government had deemed unregistered amid a crackdown on security. The company is still in negotiations about settling the penalty, which was later reduced to $3.9 billion.  

Market Assessment

MTN will shortly give its assessment of market conditions in sub-Saharan Africa and what the company’s plans are given the strident economic conditions that prevail in a number of markets that the company operates in, spokesman Chris Maroleng said in an e-mailed response to questions.

Sub-Saharan African nations are battling a decline in commodity prices as well as China’s retreat from the region by wrapping up several commodities-related projects, said Chanos.

MTN shares fell as much as 3.6% to R134.15, a three-week low, and traded 1.6% lower at 1:21pm in Johannesburg on Thursday. The stock has declined 43% over the past year.

While there are concerns about MTN’s share price because of the negotiations with the Nigerian regulator dragging on, “we do not think MTN is a short-sell,” Fabian de Beer, chief investment officer at Cape Town-based Mergence Investment Managers, said by phone. “Looking forward, we expect the company to still deliver a decent dividend yield.”

In the past, Chanos has been outspokenly negative on China’s debt surge, likening it to that which preceded Japan’s lost decade in the 1990s. He’s said for at least six years that the country’s property market will slump, and that the nation is on a “treadmill to hell” because of its reliance on real estate for growth.
http://www.moneyweb.co.za/news/companies-and-deals/jim-chanos-says-short-mtn-nigerian-sa-woes/

How does MTN business being hurt because of a downturn in the economy make Nigeria a "border line failed state"? So much hypocrisy for him. So because he successfully predicted the fall of Enron Corp he's become a demigod in other people's affairs?

MTN broke Nigeria's law and they're paying for it - no soft landing for them this time around.

QED.

Is a failed state, against using the word "borderline" whatever.