MTN Declares Bumper Profit And Dividend


MTN, Africa’s largest mobile operator, posted a 21 percent rise in first-half profit on Thursday and paid a mid-year dividend for the first time, in line with a new strategy that no longer emphasises growth by acquisitions.

Although built on aggressive acquisitions, MTN has said it will now concentrate on paying out more to shareholders, as it sees fewer potential targets in emerging market telecoms.

MTN, the largest company with a primary listing in Johannesburg, said it would pay an interim dividend of 151 cents per share, bringing its payout ratio to 40 percent of full-year earnings.

“This interim dividend is a step change in the company’s policy around dividends,” said David Lerche, a telecoms analyst at Johannesburg-based Avior Research.

“It shows they want to distribute more cash to their shareholders,” he said.

While MTN has operations in 21 countries, most of its revenue comes from South Africa, Ghana, Nigeria and Iran. Analysts say it still needs to bulk up in other markets, especially because of increased competition from India’s Bharti Airtel.

Bharti, which acquired the African assets of Kuwait’s Zain this year, has said it will invest at least $1.1 billion on its sub-Saharan business.

An attempt to acquire the Algerian unit of Egypt’s Orascom Telecom was thwarted in June by Algeria’s government, which wanted the company for itself.

MTN said adjusted headline earnings per share totalled 438.6 cents in the six months to end-June, compared with 363.8 cents in the same period a year earlier.

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MTN said last week it expected earnings to increase by 18 to 23 percent.

Revenue fell 2.2 percent to 56 billion rand, hit by a stronger rand. Total subscribers rose 11.4 percent to 129.2 million.

It also said its capital expenditure in the first-half dropped by 7 billion rand, to 8.5 billion rand.

Headline EPS is the main gauge of earnings in South Africa and excludes certain financial items.

The stock rose as much as 2 percent following the results. As of 0745 GMT shares of MTN were up 1.2 percent at 118.93 rand, outperforming a flat Top-40 index.

Shares of MTN are little changed so far this year, outperforming a 3.2 percent decline in Johannesburg’s Top-40 index.

The firm, which was the main sponsor of the 2010 soccer World Cup in South Africa, had its reputation blemished by technical glitches at the Johannesburg Stock Exchnage, whose network it manages.

The JSE was forced to delay trading twice last month, the second time for nearly six hours, due to problems with its international network connections.

The JSE’s chief executive told Reuters on Tuesday that MTN would compensate the bourse although the amount would be “very tiny”.

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