| SENS Note - 30 August 2006 |
| MTN interim results June 2006 |
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The group changed its financial year-end to 31 December at the end of the previous financial year in line with its operational cycle and international peer group, and is reporting interim results at 30 June for the first time. The last reviewed six-month period was 30 September 2005, which has been used for income statement comparatives. Results to 30 September 2005 have been restated due to the early adoption of IAS 21 (Revised) at 31 December 2005. Revenue increased by 17.6% to R20.2 billion (R17.2 billion). This was mainly due to the strong performance of MTN South Africa with revenue of the Southern African region at R11.6 billion (R9.9 billion) and Nigeria contributing R6.4 billion in revenue, a 9% increase from September 2005. Operations acquired during 2005 contributed R1.2 billion (R395 million). Earnings before interest, tax, depreciation and amortisation (EBITDA) increased to R8.7 billion (R7.2 billion) and adjusted profit after tax to R5.0 billion (R4.1 billion). Depreciation and amortisation charges increased by 31.4% to R2.2 billion for the period (R1.7 billion). This was mainly due to additional capital expenditure for the network rollout in Nigeria, where depreciation increased by R318 million to R1.2 billion, an increase of 36% relative to the six-month period ended 30 September 2005. Net finance income of R338 million was reported for the period in comparison to net finance costs of R92 million for the six-month period ended 30 September 2005. MTN Group recorded 25.4 million subscribers at the end of June 2006, a 9.4% increase from December 2005. Southern Africa contributed 58% of revenue and 48% of EBITDA (September 2005: 58% and 48% respectively). The West and Central Africa region contributed 40% and 50% of revenue and EBITDA respectively, unchanged from September 2005. The Middle East, North and East African region has not contributed significantly as Iran, which is expected to be the major contributing operation in this region, has not yet launched commercial services. Prospects On the assumption that current market conditions endure, the board expects the group to continue to show good subscriber growth and maintain a strong market position in existing operations. Capital expansion programmes in Nigeria, South Africa and Iran, as well as the operations in Investcom, are expected to provide further impetus to subscriber and revenue growth. Following the conclusion of the transaction with Investcom LLC in July 2006, the group has increased its footprint substantially and further diversified its revenue and earnings streams. Financing the transaction has resulted in the group raising additional debt and issuing shares. The related financing costs and dilution effect will inhibit the rate of growth in the group's earnings per share in the short-term. The key priorities for MTN in the short term are the integration of Investcom and realisation of synergies as a result of the transaction. In the medium term, priorities are the realisation of longer- term synergies as well as the repayment of debt used to fund the acquisition. |
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