MTN, Africa’s biggest cellphone operator by subscribers, aims to increase customers by a quarter this year and is eyeing acquisitions as demand in Nigeria and Iran helps it defy a global slowdown.
MTN, which operates cellphone networks across Africa and the Middle East, on Thursday reported a 33% rise in 2008 adjusted headline EPS to 904,4 cents, at the top end of its own forecast, and said it was cautiously optimistic about 2009.
It increased subscribers by 48% to 90,7-million — slightly slower growth than in 2007 — due to strong growth in Nigeria and Iran and said it expected to add 22,6-million customers by the end of the year.
”I think these subscriber numbers are sustainable for at least two years or more,” chief executive Phuthuma Nhleko said.
MTN shares gained 1,8% to R93,65 by 3.31pm GMT, outpacing a 0,3% higher Johannesburg Top 40 index of blue-chip stocks. The stock has lost 28% in the past year compared with the Top 40’s 40% fall.
While the global economic slowdown has hit telecom firms in developed countries, Africa has so far been relatively unscathed by the crisis and consumers are still spending on cellphones while operators seek growth opportunities in new markets.
MTN also said it was buying 17 Musica music stores from South Africa’s New Clicks for an undisclosed amount and would use them to sell MTN products as it expands its retail footprint.
MTN, which has aggressively pursued acquisitions and moved rapidly into challenging markets such as Nigeria, Iran and Afghanistan in recent years, said it may take advantage of lower valuations for telecom assets to make more acquisitions, although it stressed prices may still fall further.
MTN’s net debt decreased by R3,2-billion to R12,9-billion, while its cash balance was at R28,7-billion.
”This provides them with a solid balance sheet to be able to pursue depressed assets,” Sisa Rafuza, a portfolio manager at Metropolitan Asset Managers said.
Dividend
While many global firms have scrapped dividends, MTN rewarded its shareholders with a 181 cents per share payout, compared with 136 cents in 2007. Revenue rose 40% to R102,5-billion.
MTN may face tougher competition from its rival Vodacom in Africa after Vodafone takes control of the operator in a deal meant to give it the muscle and freedom to expand on the continent.
MTN is eyeing more growth in its Iranian business, which lifted subscribers to 16-million from six million a year earlier. By the end of this year, Iran and Nigeria are expected to add a combined 12-million users.
A WiMax licence and spectrum in Iran may help it win customers, and MTN aims to launch wireless Internet services this year.
In Nigeria, Africa’s most populous nation and MTN’s biggest market, users rose 40% to 16,5-million. The company is spending more money to expand its Nigerian infrastructure.
MTN increased South African customers by 16% to 17,2-million, but market share was flat at 36%.
Headline EPS is the main profit gauge in South Africa and strips out certain one-off, financial and non-trading items. – Reuters