MTN is growing on strong earnings

Mobile operator MTN says it expects to report a big jump in revenue for the six-month period ending June 2022.

The group said it expects an increase in earnings per share (EPS) of between 195% and 205% (or 289 cents to 303 cents). Given the EPS of 148 cents for the corresponding six-month period ended June 2021, this translates to a range of 437 cents to 451 cents for the six-month period ended June 30, 2022.

EPS includes impairment losses mainly related to goodwill totaling approximately 25 cents, an impairment loss on remeasurement of disposal groups of 52 cents, and a net loss on the disposal of SA towers of 45 cents, it said.

It expects headline earnings per share (HEPS) to increase by between 40% and 50% (or 155 cents to 194 cents). Given the HEPS of 387 cents for the corresponding six-month period ended June 30, 2021, this translates to a range of 542 cents to 581 cents for the six-month period ended June 30, 2022, it said.

HEPS was negatively impacted by some non-operating and one-time items of approximately 94 cents for the six-month period. These include hyperinflation excluding assessments, foreign exchange loss (88 cents) and an IFRS 2 charge arising from the MTN Ghana localization transaction, the group said.

Telkom takeover

MTN Group is currently in talks to buy Telkom in a deal that would make the combined company the largest South African mobile phone operator by number of subscribers, Bloomberg reported.

MTN proposed to pay for the partly state-owned Telkom in shares or a combination of cash and shares, it said in a statement earlier this month. Discussions are at an early stage and there is no certainty that the transaction will be completed, he added.

Bloomberg reported that MTN is flush with cash – following a multi-year asset disposal program – and is looking to strengthen its position in its core markets in Africa. A combination with Telkom would close the gap with rival Vodacom Group Ltd, South Africa’s market leader controlled by the UK’s Vodafone Group.

A recent spectrum auction made the continent’s most industrialized economy even more attractive to operators.

Although a deal would have to pass certain regulatory and competition concerns, “it makes financial sense to go to all Telkom given many other undervalued assets” in the company, said Peter Takaendesa, head of equities at Mergence Investment Managers.

“I’m sure they’ve found ways to deal with potential problem areas like spectrum that could cause regulatory and competition commission issues.”

Shares in the group advanced 3.5% in midday morning trading on the JSE on Monday, while it expects to publish its results on August 11.

To read: Telkom paid former boss R10 million retention fee to keep competitors away

MTN is growing on strong earnings

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