MTN South Africa reports 22% rise in first-half profit, beats market estimates

Mergers, Acquisitions and Financial Results

South Africa-based regional wireless operator MTN Group has reported a 22% increase in profits for the six months ending 30 June 2013, beating market expectations, buoyed by a strong rise in its overall subscriber base. The Group’s so-called ‘headline earnings per share’, which excludes one-off exceptional items, reached ZAR6.54 (USD0.772) for 1H13, up from ZAR5.36 for the corresponding period of 2012, beating the median estimate for profit of ZAR6.49 per share, in a poll of analysts carried out by Bloomberg.

MTN’s profit attributable to shareholders for the period under review was ZAR12.54 billion, compared to ZAR10.59 billion in 1H12. The Johannesburg-based company said that first-half revenue increased by 9.8% y-o-y to ZAR65.25 billion, from ZAR59.42 billion a year ago, despite being negatively impacted by tariff cuts in both Nigeria and South Africa.

The Group’s so-called ‘Large OpCo Cluster’ and ‘Small OpCo Cluster’ operations reported a solid 9.7% and 24.7% y-o-y growth in revenue to ZAR13.92 billion and ZAR9.08 billion, respectively. However, MTN’s South African arm reported turnover was down 1.4% at ZAR20.15 billion, although its Nigerian operation booked turnover of ZAR22.30 billion, up from ZAR19.26 billion previously – on a reported basis. ‘Although operating conditions in South Africa are expected to remain difficult, we will continue to focus on competitive, value-added propositions and on improving cost efficiencies,’ the Group said in the statement. ‘We expect the group to add a total of 21.1 million subscribers for the full 2013 year.’

MTN’s total subscriber numbers across its operations in Africa and the Middle East increased 6.5% to 201.5 million in the year to 30 June 2013, although MTN South Africa reported a marginal decline in users to 25.0 million from 25.4 million at 31 December 2012. By contrast, MTN Nigeria continued to improve its performance, adding a net 3.8 million subscribers in Q1 and a further 3.9 million subscribers in Q2, bringing total subscribers at the end of June 2013 to 55.24 million (NB: in July, MTN Nigeria disconnected 3.2 million subscribers related to the regulator-driven subscriber registration process). Elsewhere, MTN Irancell closed out June with 42.0 million subscribers (+3.8%), MTN Ghana reported 12.6 million users (+7.3%), MTN Cameroon (7.6 million, +4.3%), MTN Uganda (8.0 million, +4.4%), MTN Syria (5.5 million, down 8.6%), MTN Sudan (8.4 million, +7.2%), and MTN Cote d’Ivoire added a net 493,000 users for a total of 6.6 million.