MTN Group Limited has announced its trading statement for the six-month period ending 30 June 2023, indicating a positive outlook for the company’s financial performance. Despite facing challenges from currency devaluations and non-operational items, MTN anticipates a significant increase in earnings per share (EPS) and headline earnings per share (HEPS) compared to the previous corresponding period in 2022.
Projected Earnings Growth
MTN expects its earnings per share to grow by 10% to 20% for the six-month period ending 30 June 2023. This projection implies a range of 490 cents to 534 cents, compared to the EPS of 445 cents reported for the corresponding period in 2022. The positive growth is attributed to the company’s strong performance across its various business segments.
Furthermore, the company projects an increase in headline earnings per share (HEPS) by 0% to 10%, resulting in a range of 506 cents to 557 cents for the first half of 2023. MTN restated its HEPS for the same period in 2022 to 506 cents, which included a deferred tax income on the disposal of SA towers that was initially not accounted for in the HEPS reconciliation.
Challenges and Impact on Earnings
MTN faced challenges during the first half of 2023, which affected its earnings performance. The company reported that HEPS was negatively impacted by approximately 207 cents due to non-operational and once-off items. These included hyperinflation, foreign exchange losses, and an IFRS 2 charge related to the MTN Ghana localization transaction.
Currency devaluations also played a significant role in affecting MTN’s earnings. The volatility in forex rates in key markets during H1 2023, including rand depreciation against the US dollar and the liberalization of forex rates in Nigeria (the naira float), resulted in forex losses of 169 cents. Of this amount, approximately 128 cents came from Nigeria, with the majority of losses incurred during the month of June 2023, coinciding with the naira float.
In response to limited forex reserves in some markets, MTN elected for scrip dividend options for the FY 2022 dividends from MTN Nigeria and MTN Ghana. The scrip dividend options are expected to be accretive to attributable earnings once all allocations are finalized. However, this decision negatively impacted cash upstreamed to the Group.
Financial Position and Leverage
Despite the challenges faced, MTN maintains a relatively stable financial position. The company anticipates that its holding company (Holdco) leverage will be towards the upper end of the guidance range of “less than 1.5x.” Additionally, the Group’s consolidated net-debt-to-EBITDA is expected to be broadly in line with the level reported in December 2022.
Conclusion
MTN’s trading statement for the six-month period ending 30 June 2023 reflects the company’s positive outlook for earnings growth. With projected increases in both EPS and HEPS, MTN demonstrates its resilience in navigating challenges and maintaining a competitive position in the telecommunications industry.
Investors and shareholders eagerly await the official financial results for the first half of 2023, expected to be announced on the Stock Exchange News Service of the JSE Limited on or about Monday, 14 August 2023. The trading statement serves as a preliminary indication of the company’s performance and provides valuable insights into MTN’s strategic direction and financial health.
