Shares in cellular network operator MTN Group touched a new three-year high on Tuesday as the market warmed to the group’s better-than-expected results released after the close on Monday.
At 1015, MTN shares were trading at R27,48, up 1,78% or 48 cents from Monday’s close. They earlier traded as high as R28 — their best level since November 2000. MTN shares were up almost 4% on Monday ahead of the results.
MTN said on Monday it had boosted adjusted headline earnings per share for the six months to September by 102% to 123,3 cents.
Consolidated revenue rose to R11,272-billion, a 30% increase over the comparable period last year. Earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 61% to R4,334-billion resulting in after-tax profit rising 168% to R2,133-billion.
MTN interim headline earnings per share of 127,1 cents (September 2002:60,9 cents) were adjusted to 123,3 cents due to the exclusion of deferred tax credit of R63-million raised by MTN Nigeria.
“MTN’s results were excellent and slightly ahead of expectations. It shows what a winning strategy can bring. MTN took the risks of expanding into Africa and is now reaping the rewards,” a dealer said.
He continued that MTN’s operations in Nigeria, where the group posted an EBIDTA margin of 55%, was a strong point for the group.
“I think success there is helped by lack of fixed line operators, which means average revenue per user is so much higher.”
MTN’s success in Nigeria opened the way for competitors like Vodacom and other operators there, which could affect MTM in the future. In the meantime, they could look for other avenues of revenue in Africa.
“It is a good growth story. It is so much easier to introduce mobile than fixed line communications. In a continent like Africa, mobile is going to be the answer,” the dealer asserted.
He said that with the South African market maturing, Africa would become even more important.
“Africa, by nature, is a volatile continent, but so far the problems haven’t been disturbing.”
The wider base a company such as MTN had in Africa, the less important single countries would be.
The dealer noted that MTN had also almost eliminated its debt, a “phenomenal achievement”.
Net debt for the group reduced to R728-million by 30 September 2003, from R2,707-billion at 31 March 2003.
“The shares ran up ahead of the results, but I think there is still a bit of energy left. There is still more scope for upside,” he concluded. – I-Net Bridge