MTN’s shares leap after it reports robust profit interims

MTN’S SHARES surged by almost 9 percent yesterday after the tech giant reported a 47 percent increase in profit for the six months to end-June.

The shares closed at R158.94 on the JSE yesterday, having increased by 26.53 in the past year.

The group flagged headline earnings per share of 567 cents, a 46.5 percent increase, from 387c a year earlier.

However, MTN failed to deliver an interim dividend for the reported period, but the board said it anticipated paying a minimum ordinary final dividend of 330c per share for 2022.

MTN’s subscribers increased by 5.5 percent year-on-year to 281.6 million. Active Mobile Money (MoMo) customers rose by 24 percent year-on-year to 60.7 million.

Group president and chief executive Ralph Mupita said: “During the first half of 2022, we delivered a resilient performance under challenging global and regional macro-economic and geopolitical conditions.

“Rising energy, food, general inflation and interest rate conditions have put pressure on disposable incomes, operating and capital expenditure.

“The conflict in Ukraine and China’s ‘zero-Covid’ policy have impacted supply chains and, to mitigate risk, we accelerated capital expenditure in some of our key markets such as Nigeria and Ghana. In addition to the macro-economic challenges, in South Africa we had power supply constraints from load shedding that affected network availability

in the period,” he said.

MTN SA delivered a resilient performance against a backdrop of rising inflation and unemployment rates, interest rate hikes and currency volatility which placed even more pressure on consumers’ disposable incomes.

Notwithstanding the tough macro conditions, MTN remained focused on investing in the markets it operates in to increase broadband coverage and

to reduce the cost to communicate, Mupita said. “We accelerated network investment to R17.1 billion and spent an additional R7bn on securing 4G and 5G spectrum in the key markets of South Africa and Nigeria.”

He said growth in data revenue was particularly strong, which increased by 35.9 percent, driven by MTN Nigeria, MTN Ghana, MTN Cameroon and MTN South Africa.

On the proposed Telkom acquisition, Mupita said: “We remain engaged in the processes we agree with Telkom, to continue the process of evaluating a proposition and (to) see where that ends over a couple of weeks.”

He said while he could not comment on the proposed Telkom acquisition, he would speak on the rationale of the deal.

“There is a trend toward fixed mobile convergence globally as telecommunications transitions across the technologies, in particular the 4G to 5G transition.

“The US market has consolidated. It used to be a four-player market, it’s a three-player market for 300 million people, and China is a three-player market for one-and-a-half billion people.

“What that indicates to you is that these are business models that need an enormous amount of scale to be able to profitably deliver the services while delivering the public good because this is a private sector funded business,” he said.

However, MTN may have a fight on its hands. This after data-only network provider Rain said yesterday it had made a formal request to present the Telkom Board with a proposal which would ultimately result in the merger of the two companies

Looking ahead, Mupita said: “As we look into the second half of the year, there are factors we think will determine the operating environment.

“Inflation and currency movements are headwinds that we need to navigate. Sub-Saharan inflation is expected to remain relatively elevated as food and transport walk (their) way to wages inflation,” he said.