MTN suffers first financial loss in 20 years

2017-03-02 09:32 - Gareth van Zyl
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MTN. (Duncan Alfreds, Fin24)

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Johannesburg - Mobile network MTN [JSE:MTN] said 2016 was its “most challenging” year ever as it reported its first annual loss in 20 years.

The company on Thursday reported a headline loss of R1.4bn ($108m), or 77 cents per share, for its financial year ended December 31.

This compared with headline earnings of R13.6bn, or 746c/share, a year earlier.

The company also reported that its earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 13.2% to R51.9bn.

Its Ebitda margin also decreased by 5.5 percentage points to 35.4%.

Revenue lifted marginally by 0.4% to R146.9bn, while its group subscribers increased by 3.3% to 240.4 million across Africa and the Middle East.

A glimmer of hope shone in its data revenue, which increased by 16.7% to R39.5bn.

“MTN Group’s financial results for 2016 reflect the most challenging year in the company’s 22-year history, precipitated by a number of material regulatory, macro-economic and political challenges experienced across our regions,” said the company.

“However, despite these difficulties, the business began to show encouraging first signs of a turnaround,” MTN added.

Nigeria continued to pose challenges for the company.

MTN further outlined factors weighing down on its business such as its Nigerian regulatory fine, which had a 500c negative impact on headline earnings per share (Heps).

MTN further said its Heps was negatively impacted by foreign exchange losses of 329c, and losses from MTN’s 51% equity interest in Nigeria Tower InterCo B.V. of 122c mainly as a result of unrealised foreign exchange losses on US dollar-denominated loans.

And in South Africa, MTN said it “delivered a sub-optimal result in the first six months of 2016, with network, systems and customer service challenges”.

Despite the negative news, MTN's share price was up over 5% to R123.45 at 09:14 in Johannesburg.

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