MTN Group Ltd Thursday announced it has raised 2.1 billion rand (140.24 million dollars) from asset sales in the first half of this year as part of a divestment plan to simplify its portfolio.
The Group Chief Executive, Rob Shuter, told reporters in a post-earnings conference call yesterday in Johannesburg that the firm’s three years plan to reposition was on track.
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 it into a focused operator in high-growth markets in the Middle East and Africa.
In March, the company announced a 15 billion rand divestment programme over the next three years that will also reduce risk and improve returns.
The firm had said in a statement that in the first half of the year, it sold its shareholder loan in ATC Ghana to American Tower Corporation for 900 million rand. It said it also sold its interests in investment fund Amadeus and its associated holding in Travelstart for 1.2 billion rand.
But Africa’s largest mobile network by subscribers, however, reported a 9.3 per cent fall in earnings on Thursday.
Shutter said in spite of the drop in earnings, the firm was well on track for its 15 billion rand target over the next three years.
Headline earnings per share (HEPS), the main profit measure in South Africa stood at 195 cents in the six-months through June, compared to 215 cents in June 2018.
MTN said the earnings were impacted by the new IFRS 16 accounting standard, Nigeria fine interest, foreign exchange gains and losses, hyperinflation and the depreciation of the Iranian real, which resulted in lower earnings from MTN Iran cell.
Meanwhile, the firm which is Nigeria’s largest telecoms operator said it’s subscriber base grew by 7.7million for the six months ended June 30, 2019 to hit 240 million subscribers.
IT explained that in South Africa, the group contended with a weak macroeconomic environment as well as the introduction of new end-user requirements and the repricing of out-of-bundle data rates.
Similarly the firm noted that economic activity in Nigeria was down throughout the presidential elections period and prior to the formation of the cabinet. In Iran, its opeartion was also weakened sharply after the re-imposition of US sanctions.
But despite these adverse economic conditions, the environment, in constant currency terms, service revenue grew by 9.7 per cent to R67.9 billion and earnings before interest, taxation, depreciation and amortisation (EBITDA) expanded by 10.2 per cent to R31,2 billion. The holding company net debt to EBITDA ratio remained stable at 2.3x, which is well within the group’s guidance range of 2.0 to 2.5x, and capex intensity dropped further to 16.9 per cent, indicating greater efficiency in deploying assets.
Commenting on the results, Rob Shuter, MTN Group President and CEO, said:“We had a good first half, reporting solid financial results, good commercial momentum and encouraging strategic progress…”