Middle East unrest has had an impact – MTN CEO

Sifiso Dabengwa, president and CEO at MTN Group (MTN) said on Wednesday (March 7, 2012) that the unrest in the Middle East has impacted on the business, particularly for its operations in Yemen and Syria.

Investors however, cheered the group’s annual results which revealed a 9.7% rise in revenue to R121.88 billion, due to sound growth in Nigeria, South Africa and Iran – of 4.1%, 7.7% and 20.1%, respectively.

Adjusted headline earnings per share (HEPS) increased by 43.2%, to R10.70.

The group declared a final dividend of 476 cents.

In afternoon trade on the JSE, shares in MTN improved 2.8% to R138.91, having dipped to about R130 in late January, ironically on the back of unrest and sanctions in the Middle East.

“Ongoing unrest in the Middle East has had an impact, particularly in Yemen and Syria,” Dabengwa said at MTN’s head office in Johannesburg, adding that the unrest remains a concern.

“Ongoing sanctions in Iran are requiring additional attention. We are working very closely with our legal support to remain on the right side of sanctions pertaining to both Iran and Syria,” he said.

The company head was asked in a Q&A session what it would take for MTN to halt its business operations in Iran. “If South Africa applies sanctions and says we can’t do business in Iran,” he answered.

MTN Syria’s performance was dampened by the unrest in the country. It increased its subscriber base by 16.7% to 5.7 million marginally decreasing market share to 45%.

Revenue in Syrian pounds remained flat as airtime and subscription revenue declined 1.2% as a result of the challenges of providing continuous network service. Data revenue (excluding sms) increased 17% while sms revenue increased 11.8%.

MTN Irancell delivered a sound performance increasing its subscriber base by 16.6% to 34.7 million, in a market where penetration is above 100%. The growth was mainly attributable to lower denomination vouchers and seasonal promotions, increasing market share to 45%.

A weaker rial resulted in lower rand reported revenue growth of 20.1% to R11.050 billion and EBITDA growth of 24.1% to R4.697 billion, MTN said.

For its operations in Nigeria, MTN said it faced a challenging year as the entire market was negatively affected by the process of SIM registration. “Aggressive price competition had a negative impact on gross connections and network quality again became a focus area for the regulator as higher elasticity from lower pricing impacted traffic demand across almost all of the major networks.”

MTN did however, increase its subscriber base by 7.7% to 41.6 million and ended the year with a more stabilised market share of 50%.

“There is no clarity on the deadline for SIM registration although the regulator has initiated a process to form a central database of registration records. At the end of the year MTN Nigeria had registered 83% of the subscriber base,” the group said.

The marginally weaker naira against the rand, negatively impacted rand reported revenue growth for the year resulting in only a 4.1% increase in revenue to R34.879 billion. Reported EBITDA increased 2.2% to R21.536 billion.

Overall, MTN grew its subscriber base by 16.2% to 164.5 million.

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Middle East unrest has had an impact – MTN CEO