MTN president and CEO Phuthuma Nhleko delivered his final set of annual results for the telecommunications group on Wednesday, showcasing another dazzling set of numbers and sending the share price up more than 5%.
Nhleko, who steps down as CEO at the end of this month after a decade at the emerging-markets mobile operator, drew praise from investment analysts at Wednesday’s presentation after the group turned in a 22% improvement in subscriber numbers to 141,6m people and an improved dividend of R3,49/share (R5 for the full year).
Nhleko, reflecting on his 10 years at MTN, says even he “in some respects underestimated the size of the opportunity” for growth in the Middle East and Africa.
The group, which now operates in 21 countries, delivered Ebitda margin (earnings before interest, tax, depreciation and amortisation) of 44% for the 2010 financial year.
Turnover rose to R114,7bn, from R111,9bn previously, but would have climbed to R127bn had it not been for the strong rand exchange rate in the period under review. The rand also served to depress reported earnings.
Free cash flow soared 108% to R31bn as investment in infrastructure came down sharply following big spend on networks between 2007 and 2009. Net cash at year-end was R905m. Net cash generated from operations was a stunning R50,5bn.
The strong performance was aided by a solid turnaround at MTN SA and continued robust performance in Nigeria, by far the group’s biggest market.
The West African nation, where MTN has 52% market share, grew its subscriber base to 38,7 subscribers, from 30,8m a year ago. Average revenue per user fell slightly to US$11. Lower investment in infrastructure — R4,7bn versus R10,2bn a year ago — helped boost earnings.
Nhleko says demand for voice products remains strong, with the data market only beginning to take off.
Meanwhile, the SA operation has turned the corner after a tough 2009, driven by a strong uptick in subscriber numbers, lower capital expenditure and good growth in data.
SA subscriber numbers rose to 18,8m from 16,1m previously, suggesting the company has taken market share from its rivals in what is increasingly seen as a mature cellphone market.
Problems associated with Sim-card registration laws and chaos with MTN’s billing and IT systems are now a thing of the past, Nhleko says. The group reckons it can grow its base in SA by 2m subscribers — on a net basis — in the 2011 financial year.
Average revenue per user in SA (blended prepaid and postpaid) rose to R152/month from R145 previously. This came on the back of strong prepaid growth.
Earnings were boosted by a sharp reduction in capital expenditure, which fell from R6bn in 2009 to R3,9bn.
Iran also grew strongly, with subscriber numbers climbing to 29,7m from 23,2m previously.
Group-wide, MTN expects to add 16,9m subscribers in 2011. The biggest driver will continue to be Nigeria, where it expects to sign on an additional 4,2m customers on a net basis. Iran should also continue to be a star performer, with 3,3m net adds expected. — Duncan McLeod, TechCentral