MTN's CEO Ralph Mupita announced on Monday that the company's board has approved a 6 billion rand ($375 million) share buyback programme. The move comes as MTN reported a 21.3% rise in half-year adjusted profit and strong cash generation.
Strong Profit Growth, Share Buyback Programme Approved
MTN's profit growth is largely driven by its operations in Nigeria, Ghana, and Uganda, which helped lift service revenue 17.5% to 115.3 billion rand. Growth in South Africa was 1.5%. The company's core earnings rose 24.4% to 56 billion rand, while the EBITDA margin widened 3.1 percentage points to 47.1%. MTN's shares were up 4.61% at 201 rand on the Johannesburg Stock Exchange.
Impairment in Iran, Middle East Exit Strategy
MTN is also seeking to exit Iran, its last remaining operation in the Middle East, due to US sanctions. The company has been unable to repatriate about 880 million rand in trapped dividends since May 2018. CEO Ralph Mupita said that the sanctions have prevented the company from putting any money in or taking any money out of the country. However, if the sanctions were lifted, MTN would continue with its Middle East exit strategy.
Strong Subscriber Additions, Growth in Digital Services
MTN's strong subscriber additions and growth in digital and fintech services have also supported its performance. The company has received conditional approval from Nigeria's competition regulator for its tower deal with IHS Towers, which requires it to reduce its stake in the Nigerian business by up to 30% over time at market prices. MTN's CEO Ralph Mupita said that the remaining hurdles to the tower deal are largely regulatory.
The company's share buyback programme is expected to begin on Monday, as approved by the board. The move is seen as a positive sign for the company's investors, as it aims to return value to shareholders. However, the company's exit strategy from the Middle East and its operations in Iran remain uncertain due to the ongoing sanctions.
As MTN continues to navigate its exit from the Middle East, its focus on Africa and digital services is likely to drive growth in the coming years. The company's strong profit growth and cash generation are a testament to its operational efficiency and customer base. With its share buyback programme approved, investors will be watching closely to see how the company's exit strategy from the Middle East unfolds.
Source: Joy Online
