MTN’s interim results fall short

050815 MTN Chief executive Sifiso Dabengwa presenting the company interims in Fairlands West of Johannesburg.photo by Simphiwe Mbokazi 45

050815 MTN Chief executive Sifiso Dabengwa presenting the company interims in Fairlands West of Johannesburg.photo by Simphiwe Mbokazi 45

Published Aug 6, 2015

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Johannesburg - MTN Group’s first-half profit declined 11 percent, missing analysts’ estimates as sales fell in the company’s largest markets and foreign exchange movements weighed, Africa’s largest wireless operator said in a statement yesterday.

The group’s net income, excluding one-time items, decreased to R11.9 billion in the six months to June, the company said. That compared with an average analyst estimate of R12.2bn. Sales fell 4.9 percent to R69.2bn, with data revenue up 21 percent.

“A difficult regulatory environment and weak macroeconomic conditions continue to impact the group’s performance,” chief executive Sifiso Dabengwa said. “Results were further impacted by unfavourable exchange rate movements.”

Irancell

The group was playing recent developments in Iran by ear and as soon as it received the go-ahead it would “evaluate the balance sheet of the Iranian business and repatriate what is appropriate”, it said yesterday as it released its interim results.

MTN owns 49 percent of Irancell, Iran’s second-biggest cellphone network operator, with 44.4 million subscribers.

An MTN spokesman told Business Report that $1 billion (about R12.6bn) in dividends and loans to its Iranian partner had not been prioritised for investment, “as we have no visibility of when we’ll receive it”.

The spokesman said the company was awaiting the US decision and processes on the lifting of sanctions in Iran as the proposed deal still had to be approved by Congress and Iran would still have to meet a number of commitments before sanctions were lifted.

MTN would also not be in a hurry to recapitalise the subsidiary as it considered MTN Irancell to be cash flow positive with the capital required to operate the business.

It said yesterday that MTN Irancell had delivered a strong performance supported by growth in data revenue.

Irancell has enjoyed a steady rise in subscriber numbers since opening almost 10 years ago. In the first quarter of this year, Irancell grew data revenue by 101.5 percent year on year and data now contributes 24.5percent of total revenue.

SA and Nigeria

MTN, which has 231 million subscribers across 22 countries, has been battling strikes over pay and bonuses in its home market of South Africa, where sales have declined because of competition, handset supply-chain difficulties and labour strikes.

MTN South Africa’s results continued to show encouraging growth in service revenue, driven mainly by data revenue. This was despite its performance being “hampered by handset supply chain challenges and industrial strike action during the period”, the group said.

MTN’s biggest market by subscribers is Nigeria, where revenue fell 9 percent.

“MTN Nigeria experienced a difficult six months impacted largely by unfavourable macro-economic conditions and operational execution challenges resulting in declining revenue and higher costs,” MTN said.

“We expect the balance of the year to remain challenging for MTN Nigeria,” Dabengwa said.

* Additional reporting by Bloomberg

BUSINESS REPORT

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