Investcom, which MTN Group acquired in July 2006 for $5,5-billion, on Wednesday reported a 26% rise in total subscribers to 6,14-million at the end of June.
Investcom has operations in Ghana, Syria, Yemen, Sudan, Cyprus, Benin, Guinea Bissau, Guinea Republic and Liberia.
Investcom’s results were not included in MTN’s interim results to the end of June, but were announced separately as the transaction was only concluded in July 2006.
Investcom’s revenue was up 52% to $600-million, while profit after tax was 30% higher at $131-million.
Investcom said subscriber growth was driven principally by the recently launched Sudan operation as well as operations in Syria.
Despite the slower than anticipated roll-out in the Darfur region, subscriber additions in Sudan have maintained a upward trend.
The subscriber base in Ghana exceeded two million while the new operation in Guinea Conakry grew faster than anticipated with 115 000 subscribers at the end of June, it said.
Year-on-year revenue growth was driven mainly by the 86,5% increase in subscribers since June 2005. In addition, the consolidation of Yemen, previously accounted for as an associate, contributed to the overall increase.
The expansion of the network in Sudan and to a lesser extent the launch in Guinea Conakry, were also significant changes in the year over year revenue base. Mednet revenues increased over 60% due to a revised tariff structure and increased traffic volumes, it added.
MTN said following the conclusion of the Investcom deal, the group has increased its footprint substantially and further diversified its revenue and earnings streams.
Financing the transaction had resulted in MTN raising additional debt and issuing shares and the related financing costs and dilution effect will inhibit the rate of growth in the group’s earnings per share in the short-term.
Key priorities for MTN in the short term are the integration of Investcom and the realisation of synergies as a result of the transaction. In the medium-term, priorities are the realisation of longer-term synergies as well as the repayment of debt used to fund the acquisition.
MTN made a cash and shares offer in May to acquire the entire issued share capital of Investcom for $5,5-billion, MTN shareholders approved the transaction in June and it became wholly unconditional on July 4.
Investcom will be consolidated from this date onwards, MTN said.
The transaction settlement of cash and shares took place on July 17 and 24. In terms of the offer, $3,7-billion was settled in cash and 183-million MTN shares were issued to the previous Investcom shareholders.
Bridging finance obtained at the time of the Investcom offer was refinanced in early July through an issue of corporate paper in the South African bond market and a dollar and rand-denominated bank facility underwritten by Calyon, Citibank, Commerz, Deutsche, Sumitomo and Standard Chartered banks.
A total of R6,3-billion was raised in the bond market ‒- R5-billion with a four-year term and R1,3-billion with an eight-year term.
MTN CEO Phuthuma Nhleko said capital expansion programmes in Nigeria, South Africa and Iran as well as the operations in Investcom are expected to provide further impetus to subscriber and revenue growth. – I-Net Bridge