JSE-listed MTN, Africa's largest cellular operator, sees limited opportunities to acquire another company that would be transformational.
The group this morning released its results for the six months to June and said revenue gained 17.5% to R66.4 billion, while group subscribers grew 6.9% to 176 million. MTN has operations in 21 African and Middle East countries.
Group CEO and president Sifiso Dabengwa says MTN continues to evaluate and pursue mergers and acquisitions that can add value. However, he notes there are a limited number of transformational opportunities and that the group is considering these on an opportunistic basis.
Dabengwa says the group must consider execution risk when looking at transformational deals. He previously said a transformational deal is one that would impact significantly on revenue and subscribers, and is likely to bolster both by 50%.
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Bolt-on standalone deals remain a priority and the group is looking at either the number one or two operator in terms of scale and size when pondering possible deals. Dabengwa says MTN has to find opportunities to extract shareholder value, but has not yet been successful.
MTN has also not discounted the possibility of expanding into other emerging markets, but Dabengwa says he does not see any other obvious opportunities.
MTN currently operates in Afghanistan, Benin, Botswana, Cameroon, Cote d'Ivoire, Cyprus, Ghana, Guinea Bissau, Guinea Republic, Iran, Liberia, Nigeria, the Republic of Congo, Rwanda, South Africa, Sudan, Swaziland, Syria, Uganda, Yemen and Zambia.
Cash flush
MTN has gross debt of R35.5 billion but is in a gross cash position of R43 billion. The group ended the year with R27.5 million in the bank, but also declared a dividend that will amount to a payout of R6 billion.
The group has also spent R10.1 billion on capital expenditure in the first half of the year and its target of R24.7 billion for the full-year is on track. The bulk of the spending, at R11 billion, will go into its Nigeria operations, where it has had issues with capacity.
MTN will also invest R5 billion in SA, R1.4 billion in Iran, R1.1 billion in Ghana and R869 million in Syria. The rest of its operations will receive R4.5 billion, and 90% of the authorised capital investment should be capitalised by the end of the year.
So far, the group has spent R1.9 billion in SA, R4.4 billion in Nigeria, R418 million in Iran, R273 million in Ghana and R239 million in Syria. Its other operations have received R2.5 billion.
The group is investing in 3G capacity and coverage to support growth as income from voice revenue slows and is replaced by data. In the first half, data grew 70% to R6.7 billion and contributed 10% to overall turnover.
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