MTN`s latest results confirm the cellular operator makes more profit for each rand of sales than rival Vodacom does.
Last night the group released its figures for the six months to 30 September, showing revenue of R17.18 billion, a 25.2% increase from the same period a year earlier.
Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 27.6% to R7.2 billion, which means the EBITDA margin rose from 40.1% to 41.7%. MTN CEO Phuthuma Nhleko says the improvement is mainly the result of an increased contribution from the group`s international operations.
An EBITDA margin (EBITDA as a percentage of revenue) is an indication of to what degree cash operating expenses eat up revenue.
MTN fared better than Vodacom in this regard, with Vodacom last week reporting EBITDA of R5.6 billion on revenue of R16.18 billion, representing a margin of 34.6%.
MTN`s pre-tax profit was up 32% at R5.44 billion (2004: R4.12 billion), compared with Vodacom`s R3.84 billion.
MTN recorded a net profit of R4.46 billion (R2.97 billion), representing a net profit margin of 26%, an improvement on the 25% margin of the year-earlier period. A net margin of 26% means that for every rand of sales the group makes, 26c goes to the bottom line.
Vodacom, with a net profit of R2.39 billion, recorded a net margin of 14.8%. But although Vodacom`s margin is still substantially lower than that of its rival, the gap has narrowed. Last year Vodacom recorded a net margin of 10.9%.
Profit per rand
Adjusted headline earnings per share (adjusted HEPS) rose 30.8% to 222.5c. This figure excludes the beneficial effects of a deferred tax asset recognised by MTN Nigeria. Basic HEPS rose 21.1% to 234.1c.
MTN`s total subscriber base increased to 20.57 million during the period, up 32% from the end of March. This compares with Vodacom`s 19.1 million. However, while Vodacom has the bigger market share in SA, with 15.77 million subscribers against MTN`s 8.96 million, MTN is ahead in the rest of Africa, with 11.61 million subscribers versus Vodacom`s 3.33 million.
Nhleko says MTN recorded blended average revenue per user (ARPU) of R168 in SA, a decline of 9% as the group continued to penetrate lower usage segments. Vodacom also experienced an ARPU decline, from R165 to R147.
Nhleko says MTN plans to consolidate its position on the continent by continuing to explore expansion opportunities in Africa and the Middle East, and by moving into businesses complementary to the core mobile telephony business.
The group has a healthy balance sheet, with short-term assets outweighing short-term debts on a ratio of 1.1:1, although this is down from the 1.3:1 ratio at the end of the previous interim period. Cash balances amounted to R4.83 billion at the end of the period, compared with R3.3 billion a year earlier and R5.84 billion at the year-end.
Nhleko says the group has changed its year-end from March to December and will next publish results for the nine months to 31 December.
The group last night withdrew a cautionary notice that had the market speculating that MTN was a takeover target. The group has said only that talks, the nature of which has not been disclosed, have been terminated.
The MTN share was trading at R56.90 on the JSE this morning, down R3.04 or 5.1% from yesterday`s close.
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