‘Most challenging year’ in MTN history
Numerous factors, including regulatory fine, have affected drop in profit
MTN has reported its first ever loss of 77 cents a headline share.
This comes despite a 3.3% increase in subscribers to 240.4 million. But MTN has reviewed the company and has identified measures to deliver on its strategy.
MTN also noted yesterday that its earnings before interest, tax, depreciation and amortisation for the year to December declined 13.2% to R51.98 billion as revenue increased marginally by 0.4% to R146.9bn.
The listed company, with operations in Africa and the Middle East, noted in its results “reflect the most challenging year in the company’s 22-year history, precipitated by a number of material regulatory, macro-economic and political challenges experienced across our regions”.
Despite these difficulties, the business began to show encouraging first signs of a turnaround, it said.
MTN’s results were impacted by several factors, including once-off costs, which affected its operating profit.
These included the Nigerian regulatory fine of R10.5bn, professional fees related to the settlement of the Nigerian regulatory fine of R1.3bn, MTN Zakhele Futhi share-based payment expense of R1bn, the impairment of property, plant and equipment in South Sudan of R295m, and Project Winback, relating to the reconnection of subscribers in Nigeria of R530m.
Excluding the impact of hyperinflation and the relating goodwill impairment, tower profits, the Nigerian regulatory fine and the MTN Zakhele Futhi share-based payment expense, its operating profit declined 13.2%.
Headline earnings per shares, which were 110% lower, were impacted by the regulatory fine, which had a negative 500c impact, as well as foreign exchange losses of 329c; losses from MTN’s 51% equity interest in Nigeria Tower of 122c mainly as a result of unrealised foreign exchange losses on US dollar-denominated loans, the MTN Zakhele Futhi impact of 88c; professional fees related to the settlement of the Nigerian regulatory fine, hyperinflation of 37c and losses from its investments in Digital Group, mainly including Africa Internet Holdings, Middle East Internet Holdings and Iran Internet Group of 39c.
The group, which repatriated R6 308m (€425m) from MTN Irancell up to December 31, also refinanced maturing facilities and secured additional long-term financing facilities from local and international sources to fund capital expenditure and working capital. However, MTN said all was not lost. After the settlement agreement, the infusion of new senior management, its board has undertaken a “deep and fundamental strategic review” of the business and its processes to ensure MTN is operating far more optimally in a complex and difficult operating environment.
“The outcome of this review illuminated areas of the business which required urgent attention. It also highlighted the company’s unique position in a fast moving industry.” – Go to www.busrep.co.za