Africa’s largest mobile network by subscribers, South Africa’s MTN Group Limited, on Thursday reported a 9.3% fall in earnings, even as it announced $140.24m (2.1bn rand) revenue from asset sales in the first half of this year as part of a divestment plan in a bid to simplify its portfolio.
A report by Reuters said that MTN is in the middle of reviewing its presence in some markets alongside investments in e-commerce platforms as part of a plan to streamline the company into a focused operator in high-growth markets in the Middle East and Africa.
In March, it announced a 15bn rand divestment programme over the next three years that will also reduce risk and improve returns.
In the first half to June it sold its shareholder loan in ATC Ghana to American Tower Corporation for 900m rand, besides selling its interests in investment fund Amadeus and its associated holding in Travelstart for 1.2bn rand, Reuters reported MTN Group as saying in a statement.
“So we’re well on track for our 15bn rand (target) over three years,” Group Chief Executive Rob Shuter told reporters in a post-earnings conference call.
According to the interim financials for the half-year ended June 30, 2019, the group’s South African business is under pressure due to new sector regulations and the weak economy; following which EBITDA margin fell by 1.9% points in the past year to 33.3%, owing to the lower out-of-bundle tariffs and the onboarding of Cell C as a roaming customer.
Highlights of the half-year result showed a 7.7m rise in subscriber base to 240m across its 21 operational countries, from the level at the end of December 2018; a 9.7% growth in service revenue; while EBITDA margin improved to 35.2%. The group is offering 195 cents per share for the period, up by 11.4%.
The group said the financial information was “prepared excluding the impact of hyperinflation and the goodwill and asset impairments, tower profits, the Nigerian regulatory fine (consisting of the re-measurement impact when the settlement was entered into and the finance costs recognised as a result of the unwind of the initial discounting of the liability), gain on dilution of Jumia, impairment of investment in MEIH, gain on Travelstart and impact of IFRS 16 (‘the pro forma adjustments’) and constitutes pro forma financial information to the extent that it is not extracted from the segment disclosure included in the reviewed condensed consolidated interim financial statements for the six months ended 30 June 2019.”
The group’s service revenue increased by 9.7% in constant currency terms, led by growth of 12.2% by MTN Nigeria; 18.7% by MTN Ghana; and 3.3% by MTN South Africa. MTN South Africa’s performance was impacted “by changes to out-of-bundle (OOB) tariffs and a reassessment of revenue recognition criteria and adjustments required due to delayed payments under the network roaming agreement with Cell C.”
On its ongoing tax dispute between Nigeria’s Federal Government and MTN Nigeria which continues on October 29, 2019, the group said it remains resolute that it “has not committed any offence and will continue to defend this position.”