Africa's largest cellular company, MTN, is looking for more opportunities to expand its presence in Africa and the Middle East, as well as new solution sets to add to its range.
The company yesterday presented its results for the half-year to June and reported revenue up a percent, to R56.5 million, on the back of strong growth in SA and Iran.
However, this was offset by negative growth in rand terms in Ghana and Syria, and no growth in Nigeria. Taking out the currency differences on a year-by-year basis, revenue would have been 9% higher, at R61.2 billion.
It declared an interim dividend of 273c a share, increasing its payout ratio 65%. A year ago, the company declared a maiden interim dividend of 151c a share as it sought to return some of its cash to shareholders.
CEO and president Sifiso Dabengwa says the company has not yet decided how it will return more cash to shareholders, as this is still a topic the board is discussing. However, he says it is “key” to return more cash to investors.
MTN is highly cash-generative; it improved free cash flow 23.7%, to R19.5 billion, and has R32.7 billion in cash and cash equivalents, a slight decline from last year's R35.94 billion.
Some of the cash will go into capital expenditure, as the group plans to spend a total of R22 billion this year, of which only R5.7 billion has already been invested. Dabengwa explains this was due to logistics problems at its suppliers and delays in internal processes, but says spending will be ratcheted up in the second half of the year.
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The mobile operator has operations 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.
There are a number of countries MTN is focusing on across Africa and the Middle East, says Dabengwa. However, it is difficult to implement a deal as many countries are already saturated and mobile operators are over-priced, he notes.
In addition, integration is not always easy, as it is an execution risk, says Dabengwa.
MTN will only consider deals that add real value and move the “needle”. He does not want to buy a lot of small entities and not see them add real value to the company financially. “Little businesses that have no impact are probably not the best strategy.”
Dabengwa says the company also wants to broaden its services and could make acquisitions to strengthen its portfolio.
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