MTN Profits Fall As Tough Economic Conditions Bites

The tough economic environment appears to be taking its toll on MTN as its key markets face headwinds. MTN, Africa and the Middle East largest mobile phone operator, said on Wednesday its half-year profit dropped by 7% as tough economic conditions bites.

The mobile phone firm, which is valued at R208 billion, reported that headline earnings a share (HEPS) dropped 7% to 215 cents a share in the six months to end-June.

HEPS is South Africa’s main profit gauge.

MTN said its earnings were impacted by hyperinflation, the Nigeria fine interest, and foreign exchange losses.

The mobile phone operator has been trying to revive itself after in 2015 was hit with a $5.2 billion (R71 billion) fine, which forced the firm to fire most of its executive and devise a new strategy.

Last year, MTN stepped up the telco’s plans to win more mobile data and digital services, customers. It also sold its Cyprus subsidiary for R4.1 billion (€260 million) as part of an ongoing review of its portfolio.

In spite of that, the South African-based firm, which is led by Rob Shuter, reported a 2.2% rise in EBITDA margin in the first half to

Macroeconomic conditions remained challenging for MTN’s key markets of South Africa, Iran and Cameroon. The Iranian economy felt the impact of the US decision to withdraw from the Joint Comprehensive Plan of Action agreement. 

Against this mixed backdrop, Shuter said MTN delivered encouraging first-half performance.

“MTN had an encouraging first half of 2018, with an acceleration in the second quarter, supported by an improved operational performance across many markets. This was led by Nigeria, Ghana and South Africa.,” said Shuter.

“Service revenue growth increased, driven by robust voice revenue growth and the continued expansion of data and digital revenue. This, in turn, was supported by a 2,8% increase in subscriber numbers, continued network rollout, increasing 3G and 4G population coverage and improving customer service.”

Despite, profits falling MTN declared an interim dividend of R1.75 a share and said its on track to reward investors with a R5 a share full-year dividend.

“Despite continued challenges in repatriating funds from MTN Irancell, the board remains committed to plans to declare a total dividend of 500 cents per share for 2018 and is targeting growth of 10% to 20% over the medium term,” said Shuter.

“We believe everyone deserves the benefits of a modern connected life and see an opportunity to provide this. We are confident that MTN remains well placed to deliver on our medium-term guidance.”