Mobile operator MTN says it expects a big profit increase for the six-month period ending June 2022.
The group said it expects earnings per share (EPS) to increase between 195% and 205% (or 289 cents to 303 cents). Taking into account the EPS of 148 cents for the corresponding six-month period ending June 2021, this translates into a range of 437 cents to 451 cents for the six-month period ending June 30, 2022.
EPS includes impairment losses primarily related to goodwill totaling approximately 25 cents, an impairment loss on divestment revaluations of 52 cents, and a net loss on the sale of SA towers of 45 cents, it said.
It expects total earnings per share (HEPS) to rise 40% to 50% (or 155 cents to 194 cents). Given the HEPS of 387 cents for the corresponding six-month period ending June 30, 2021, this translates into a range of 542 cents to 581 cents for the six-month period ending June 30, 2022, it said.
HEPS was negatively impacted by some non-operating and one-off items of approximately 94 cents for the six-month period. These include hyperinflation excluding impairments, foreign exchange losses (88 cents) and an IFRS 2 charge arising from the MTN Ghana localization transaction, the group said.
Telkom acquisition
MTN Group is currently in talks to buy Telkom in a deal that would make the combined company the largest South African mobile phone operator by number of subscribers, Bloomberg reported.
MTN proposed to pay for partially state-owned Telkom in stock or a combination of cash and stock, it said in a statement earlier this month. Discussions are at an early stage and there is no assurance that the transaction will close, it added.
Bloomberg reported that MTN has ample cash – following a multi-year asset sale program – and is looking to strengthen its position in its key African markets. A combination with Telkom would close the gap with rival Vodacom Group Ltd, South Africa’s market leader controlled by the British Vodafone Group.
A recent spectrum auction made the continent’s most industrialized economy even more attractive to operators.
While a deal would have to overcome some regulatory and competition concerns, “it makes financial sense to go after Telkom given many other undervalued assets” in the company, said Peter Takaendesa, head of equities at Mergence Investment Managers.
“I’m sure they’ve found ways to deal with potential problem areas, such as spectrum that can cause problems with regulatory and competition commissions.”
Shares of the group rose 3.5% in mid-morning trading on the JSE on Monday, with the group expecting to release the results on Aug. 11.
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