MTN Group Profit Falls Amidst Subscriber Growth

MTN Group Chief Executive Officer, Sifiso Dabengwa

.Nigeria remains largest market

Emma Okonji with agency report

The MTN Group, with headquarters in Johannesburg, South Africa, Wednesday released its 2012 financial report and declared that its profit fell slightly, compared to that of 2011, due to foreign exchange losses in some of its more difficult markets.

It however said in a statement that its subscriber base increased by 15.1 per cent to 189.3 million in 2012, adding that its revenue also increased in other markets, despite the challenges faced in doing business in all its 21 operations in 2012.

Announcing the result, MTN Group Chief Executive Officer, Sifiso Dabengwa, said “MTN's profit attributable to equity holders of the company for the year ended December 31, 2012, fell to 20.70 billion rand ($2.29 billion) from 20.75 billion rand the year earlier. Revenue rose to 135.11 billion rand from 121.88 billion rand for the year.”

The depreciation of the local currencies in Iran, Syria and Sudan against the rand weighed on earnings, the company said, while competition in a number of its African markets rose.
According to the statement, Nigeria remained MTN's biggest market in terms of subscriber-base and the African continent as a whole accounting for its largest share of business, but the Middle East has become a key growth area, with Iran a major part of its growth outlook, being its second-largest subscriber-base.

Dabengwa said he expects the number of customers to increase by another 21 million in 2013, with the biggest growth expected in Nigeria and Iran.

MTN, which has targeted the growth potential in emerging markets, had also run into challenges in those countries too. Operating in war-torn Syria poses special challenges, Dabengwa said. He explained that it was dangerous for employees to come to work at times, due to the challenges,  and that telecommunication lines got cut in most cases, coupled with poor energy supply.

He said MTN's current operating license in Syria would expire in 2017, and that an exit from the country was part of discussions currently going on. “What happens after 2017 is uncertain, because talks with the government to convert its licence to a full-operating licence have been halted,” Dabengwa said.

Confirming the result, Corporate Services Executive of MTN Nigeria, Mr. Wale Goodluck, told THISDAY that MTN Nigeria had consecutively made profits over the years and contributed a great deal to MTN Group. According to him, MTN Group would set aside huge amount of money for its capital expenditure (CAPEX) to the tune of 28 to 29 billion rand and that 13 billion rand out of the total CAPEX, would be deployed to MTN Nigeria for network expansion.

MTN is one of 90 companies that have expressed an interest in obtaining a licence in Myanmar, and has submitted an expression of interest for one of two licences the country has put up for tender, Dabengwa said. He explained that the formal bid packages would now be submitted and he expects a result by June this year.

According to the report, MTN's results for the year ended 31 December 2012, which notwithstanding significant challenges, reflected solid progress in growing subscribers, revenue and Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA).