MTN 1st Half Net Profit Rises 12%, Seeks Expansion
JOHANNESBURG -(Dow Jones)- MTN Group, the African cellphone operator twice thwarted this year from expanding into the densely-populated Indian market, continues to scout for acquisitions in emerging markets.
The Johannesburg-based company Thursday reported a 12% rise in net profit for the first half of the year as it added new subscribers. Chief Executive Phuthuma Nhleko told Dow Jones Newswires about 22 million new customers could be signed up this year and he saw no reason why that couldn't be repeated in 2009.
"We are seeing competitive pressure, but we're well positioned to grow our dominant market share," Nhleko said, and he said MTN continued to look for growth in Africa, the Middle East and possibly south Asia.
MTN in July broke off tie-up talks with Reliance Communications after a deal was thwarted by a family feud between the controlling chairman of the Indian company and his brother. Just prior to entering talks with Reliance, MTN and India's Bharti Airtel gave up on talks after they couldn't agree the structure of a merger.
Nhleko said it wasn't likely that talks with either company would resume any time soon, although the large but competitive Indian market was one that "can't be ignored."
However, he said the company was looking at the possible acquisition of Internet service providers in countries such as Syria. MTN in late June agreed to buy Verizon Communications's Verizon South Africa, which provides Internet services to corporate customers in South Africa, Namibia, Botswana, Zambia and Kenya.
MTN's first-half profit rose to 6.24 billion rand ($811.8 million), or 326.6 cents a share, from ZAR5.56 billion, or 286.2 cents, a year earlier.
Revenue was 35% higher at ZAR46.13 billion, and MTN said its subscriber base increased 53% on the year to 74.1 million.
Nhleko said MTN expected to add 22.68 million customers in 2008, including five million in Nigeria and 8.5 million in Iran, and possibly a similar number next year.
At 1333 GMT, MTN's shares were trading 1.2% higher at ZAR115.40, in line with the broader market.
MTN launched its service in 1994, the same year Nelson Mandela took office as president with the end of apartheid in South Africa. It has steadily expanded both its geographic footprint and subscriber base over the years, taking a large step in 2006 with the $5.5 billion acquisition of holding company Investcom.
Nhleko said that while growth prospects in Africa remain healthy, with an overwhelming percentage of the population in many countries yet to own a mobile phone, competition is on the rise.
New entrants are expected over the next six to 12 months in Nigeria, Ghana, Iran, Syria and Uganda. And already MTN has lost market share in Nigeria, despite increasing its customers by 12% to 18.6 million.
Nhleko said the company was well positioned and had a healthy balance sheet with which to continue expanding and he expects MTN to become a "beacon" for consolidation. He said MTN's addressable market would increase to about 306 million subscribers by 2012 from 189 million now.
-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 28th August 2008
