Rand weakness hurts MTN

 ·31 Jul 2023

MTN says the weakness of the rand and the Nigerian Naira negatively impacted its financial performance for the first half of 2023.

In a trading statement for a six-month period ended 30 June 2023 (H1 2023), MTN said that earnings per share (EPS) will likely increase by 10% to 20% (45 cents to 89 cents) from 445 cents in H1 2022 to 490 to 534 cents in H1 2023.

MTN said that the EPS includes losses in relation to property, plant and equipment and associates of 13 cents (H1 2022: 25 cents), impairment loss on remeasurement of disposal groups of 21 cents (H1 2022: 52 cents) and a net profit from the disposal of South African towers and other assets of 3 cents (H1 2022: 16 cents).

In addition, the group said that headline earnings per share (HEPS) grew between 0% and 10% (0 cents to 51 cents) from 506 cents in H1 2022 to 506 to 557 cents.

The group said that its HEPS was severely hurt by non-operation and once-off items of roughly 207 cents (H1 2022: 94 cents), including hyperinflation (excluding impairments) of 38 cents (H1 2022: 2 cents), an IFRS 2 charge arising from the MTN Ghana localisation transaction of 0 cents (H1 2022: 4 cents) and foreign exchange losses of 169 cents (H1 2022: 88 cents),

As the group previously said, the deferred tax income on the disposal of South African towers of R1.1 billion was not included in the H1 2022 HEPS reconciliation – with HEPS in H1 2022 brought down by 61 cents to 506 cents:

30 June 202230 June 2023Expected increase
EPS445 cents490 – 534 cents10% – 20%
HEPS506 cents506 – 557 cents0% – 10%

The company noted the volatility in forex rates on its operations in H1 2023, including the rand depreciation against the US dollar.

That said, the group said that the majority (128 cents) of the 169 cents of forex losses were from Nigeria – with 95 cents incurred only in June.

The group added that it elected for scrip dividend options for FY 2022 dividends for MTN Nigeria and MTN Ghana due to the limited forex reserves in both markets – but neither scrip dividends are material in the H1 2023 results.

“They (the scrip dividend options) will, however, be accretive to attributable earnings once all allocations are finalised, although this does negatively impact cash upstreamed to the group,” MTN said.

“These effects, particularly rand depreciation against the US dollar and election of the scrip dividend options, have thus also impacted the group’s holding company (Holdco) leverage in the period, which is anticipated to be towards the upper end of the guidance range of ‘less than 1.5x.’ The group consolidated net-debt-to-EBITDA is anticipated to be broadly in line with the December 2022 level.”

Read: MTN to build R6 billion fibre cable connecting 10 countries

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