MTN expects increase in earnings

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 31 Jul 2023
MTN head office in Johannesburg.
MTN head office in Johannesburg.

Mobile operator MTN is expecting an increase in earnings when it announces its financial results for the six months ended 30 June.

This emerged when MTN today released a trading statement for the period. The company will announce its results on 14 August.

In the statement, MTN says it anticipates an increase in earnings per share (EPS) of between 10% and 20% (or 45c to 89c).

Considering the EPS of 445c for the corresponding six-month period ended 30 June 2022, it says this translates to a range of 490c to 534c for the six-month period ended 30 June 2023.

EPS includes impairment losses that mainly relate to property, plant and equipment and associates of 13c (June 2022: 25c), an impairment loss on remeasurement of disposal groups of 21c (June 2022: 52c) and a net profit on the disposal of SA towers and other assets of 3c (June 2022: 16c).

The company also expects an increase in headline earnings per share (HEPS) of between 0% and 10% (or 0c to 51c).

It explains that considering the restated HEPS of 506c for the corresponding six-month period ended 30 June 2022, this translates to a range of 506c to 557c for the six-month period ended 30 June 2023.

The group previously announced in its FY22 results that the deferred tax income on the disposal of SA towers of R1.1 billion was not included in the H1 2022 HEPS reconciliation, but correctly processed within earnings and basic EPS.

It adds that HEPS reported in H1 2022 was consequently restated with a reduction of 61c to 506c.

According to the firm, HEPS was negatively impacted by some non-operational and once-off items of approximately 207c (June 2022: 94c) for the six-month period.

These include hyperinflation excluding impairments of 38c (June 2022: 2c), foreign exchange (forex) losses of 169c (June 2022: 88c) and an IFRS 2 charge arising from the MTN Ghana localisation transaction of 0c (June 2022: 4c).

Further to the above, the company notes the volatility in forex rates in key markets during H1 2023, including rand depreciation against the US dollar and the liberalisation of forex rates in Nigeria (the naira float).

Within the aforementioned 169c of forex losses outlined in the above guidance, is 128c from Nigeria, of which approximately 95c was incurred in the month of June 2023 (the month of the naira float).

The group elected for scrip dividend options for the FY 2022 dividends from MTN Nigeria and MTN Ghana in the period under review, given limited forex reserves in both markets.

For MTN Nigeria, it says, the ordinary shares created from the scrip dividend election have been approved by Nigeria’s Corporate Affairs Commission and are awaiting final regulatory approval for the shares to be credited to the respective Central Security Clearing System accounts of qualified shareholders.

For MTN Ghana, the telco says the allocation was completed towards the end of June 2023. Therefore, the impacts of the election of the scrip dividend options are not material in the H1 2023 results.

They will, however, be accretive to attributable earnings once all allocations are finalised, although this does negatively impact cash upstreamed to the group, says the telco.