MTN swings back to profit

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

ROB SHUTER, who has been MTN’s chief ex­ec­u­tive for five months, yes­ter­day un­veiled a strong set of in­terim re­sults as the com­pany swung back to profit as it in­creased its data sub­scribers and rev­enue.

This comes af­ter a dif­fi­cult 2016 for Africa’s big­gest mo­bile phone op­er­a­tor as it bat­tled to con­tain the fall-out af­ter Nige­rian au­thor­i­ties slapped it with a $1.1 bil­lion (R14.57bn) fine over un­reg­is­tered SIM cards.

To­tal rev­enue rose 6.7 per­cent to R64.3bn, while head­line earn­ings came in at R3.9bn, or 212 cents per share, in the six months to end June com­pared with a loss of R4.9bn, or 271c per share, a year ear­lier.

The im­proved num­bers were de­spite the fi­nan­cial crunch in its big­gest mar­ket, in­clud­ing the sig­nif­i­cant weak­ness of the naira in Nige­ria, the tech­ni­cal re­ces­sion in South Africa and hard cur­rency liq­uid­ity dur­ing the pe­riod un­der re­view.

“We are see­ing pleas­ing progress in our key growth driv­ers of data and dig­i­tal ser­vices against head­winds of chal­leng­ing macro-eco­nomic con­di­tions and for­eign ex­change cur­rency pres­sures,” Shuter said.

The group de­clared an in­terim div­i­dend of 250c a share, in line with the 2017 fi­nan­cial year guid­ance of 700c a share.

Data rev­enue in­creased by 31.9 per­cent, fol­low­ing sig­nif­i­cant im­proved data net­work qual­ity and ca­pac­ity across key mar­kets.

A ma­jor high­light was that data users in­creased 9.1 per­cent to 122.7 mil­lion. Data rev­enue in­creased in South Africa by 14.4 per­cent; 70.4 per­cent higher in Nige­ria; 29.9 per­cent higher in Uganda an 65.9 per­cent up in Ghana.

How­ever, cap­i­tal ex­pen­di­ture guid­ance was re­duced for 2017 to R30bn from a pre­vi­ous guid­ance of R34.8bn.

But sub­scriber num­bers in the pe­riod de­creased by 3.6 per­cent to 231.8 mil­lion im­pacted by a de­cline in sub­scriber num­bers in MTN Nige­ria and MTN Ghana. “This was largely a re­sult of the group’s ini­tia­tive to mod­ernise sub­scriber def­i­ni­tions to re­flect the busi­ness’s chang­ing mix of rev­enue streams,” Shuter said. How­ever, South African sub­scribers in­creased 1.5 per­cent to 31.2 mil­lion.

On track

In terms of prospects, Shuter said MTN was on track to meet its 2017 fi­nan­cial year guid­ance, de­spite the muted eco­nomic growth fore­cast across its mar­kets.

In South Africa, its big­gest mar­ket, MTN said it ex­pected mid-sin­gle-digit ser­vice rev­enue growth and earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­sa­tion mar­gin ex­pan­sion of 50 and 100 ba­sis points yearon-year.

And it ex­pected sin­gle-digit rev­enue growth year-on-year in Nige­ria, sup­ported by an im­proved com­pet­i­tive po­si­tion, and im­proved net­work qual­ity. MTN Nige­ria also de­clared an in­terim div­i­dend, ex­pected to re­sult in $95m be­ing re­ceived.

In Iran, MTN ex­pected to ben­e­fit from growth in the Ira­nian econ­omy and from the coun­try’s youth­ful pop­u­la­tion, par­tic­u­larly in the dig­i­tal ser­vices space.

Shuter pro­jected that MTN would gen­er­ate R815bn from rev­enue pools across its 22 mar­kets by 2020, in­clud­ing R575bn from data, voice and dig­i­tal ser­vices. A to­tal of R210bn was ex­pected from en­ter­prise and R30bn from whole­sale rev­enue, the com­pany said.

Brian Neil­son, a di­rec­tor at BMI-Tech­knowl­edge, said the re­sults were pos­i­tive. “Af­ter an ex­tended pe­riod of bad news, par­tic­u­larly the chal­lenges faced by MTN in Nige­ria, a spate of good news is go­ing to be wel­comed by all,” he said.

MTN pro­jected data sub­scribers would grow to 500 mil­lion from 200 mil­lion by 2020, dig­i­tal sub­scribers would grow to 250 mil­lion from 150 mil­lion, while dig­i­tal sub­scribers were ex­pected to 250 mil­lion in 2020.

MTN’s share price fell 1.79 per­cent to close at R117.11 on the JSE yes­ter­day.

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