MTN suffers 10.3% profit decline

mtnTHE first half of the year report of Africa’s largest telecommunications firm, MTN, has shown a 10.3 per cent fall in its group profits. This was specifically attributed to handset supply disruptions in its mainstay South African market and foreign exchange challenges.

MTN, which operates in several African countries, including Nigeria, said diluted headline earnings per share (EPS) were 654 cents in the six months to the end of June compared with 727 cents a year earlier.

Headline EPS is the main profit measure in South Africa and it strips out certain one-off items.

MTN, which has 231 million subscribers across 22 countries, has been battling strikes in the last seven weeks, over pay and bonuses in its home market of South Africa. This has resulted in sales decline because of competition, handset supply-chain difficulties and labor issues. MTN’s biggest market by subscribers is Nigeria, where it currently enjoys 43 per cent market share and 62 million subscribers, also saw their revenue fell by nine per cent.

“Sales fell 4.9 per cent to 69.2 billion rand ($5.43 billion) in the period, hit by unfavourable currency movements and a poor performance in Nigeria, where a sharp slowdown in the economy weighed on consumer spending”, the report stated.
Commenting, Chief Executive Officer, MTN Group, Sifiso Dabengwa, said: “A difficult regulatory environment and weak macroeconomic conditions continue to impact the Group’s performance. Adding, “Results were further impacted by unfavorable exchange rate movements.”

About 2,000 entry-level workers downed tools at MTN’s South African operations in May, demanding higher pay and disrupting the supply new mobile phones.

Sales were boosted by a more than 20 per cent growth in higher margin data sales, the company said.

MTN and rival Vodacom are struggling to grow revenue from voice calls at home and abroad, having slashed tariffs to defend market share.

In the future projections, the company cut its 2015 subscriber growth forecast to 16.75 million customers from 17.5 million estimated in March.

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