MTN Group is expecting to post a profit for the six months to the end of June, reversing a negative performance in the previous year that the pan-African group blamed squarely on non-recurring costs such as that Nigerian regulatory fine.
In a statement to the Johannesburg Stock Exchange, MTN said it expects to report interim 2017 basic headline earnings per share of between 210 cents and 230 cents, and basic earnings per share of between 280 cents and 300 cents. That compares to a headline loss per share of 271 cents and an attributable loss per share of 301 cents for the comparable period of 2016. Full half-year results will be announced on August 3.
However, the half-year headline earnings came in below expectations, causing MTN's share price to drop 6.77%, according to Reuters.
"MTN's statement did not have much detail, but earnings were less than analysts expected," Momentum SP Reid Securities analyst Sibonginkosi Nyanga told the news agency.
Nyanga said a Thomson Reuters consensus of 17 analysts forecast an earnings per share mean estimate of 628 cents for the 2017 financial year, Business Day reported.
MTN explained that the negative performance in the prior comparable period "was mainly as a result of non-recurring costs, including the Nigeria regulatory fine of 474 cents per share (cps) which was fully expensed in prior periods, professional fees related to the fine of 73 cps and losses of 136 cps from MTN's 51% equity interest in Nigeria Tower InterCo."
As previously reported by Connecting Africa, the excessive fine levied by Nigerian authorities in late 2015 -- a payment of NGN330 billion ($1.1 billion) was eventually agreed -- both compounded challenges and masked more fundamental strategic issues at MTN, leading to the release of a tough set of results for 2016. (See Making MTN Great Again.)
Peter Takaendesa, Mergence Investment Managers portfolio manager, told Business Day that the market will be watching for the underlying operational strength.
"Our view is that earnings have bottomed here and the turnaround under the new management team should start to deliver a much-improved earnings performance from 2018," he said.
MTN's new management team includes a new CEO (Rob Shuter, who started March 13), CFO, COO, CMO, M&A head, head of enterprise, head of regulation, CEO of a key market (South Africa), in what was an unprecedented overhaul of its top management. (See MTN's South Africa CEO Jumps Ship, Africa's MTN Appoints Vodafone's Shuter as CEO and MTN Ignites Digital Transformation With Executive Appointments.)
— Anne Morris, contributing editor, special to Connecting Africa