MTN delivers great results
ADSL South Africa (Broadband South Africa), 2 April
2007
MTN has delivered an excellent set of results with after-tax profit coming in at R12bn. MTN
investors have much to smile because it’s clear that MTN is giving them a lot of value for money.
How much is the dividend per
share?
Investors will get a welcome 90 cents per share.
What about growth in MTN’s subscriber base, et
cetera?
Hold on to your seat because this is where things really get
interesting…
Any
potential trouble spots?
Not really according to MTN although ADSL South Africa is sceptical.
We’re sceptical because a possible US led invasion against Iran cannot be placed on
the back burner. While it’s true that many people will not support a war against Iran because of obvious set backs
in Iraq, we’re sure an event or events will follow in order to convince the American people (and others) that a war
against Iran will be in their best interest, which might not be the case. The current situation where fifteen UK
Navy personnel is held by Iran, is just one example of how easy it is to find an excuse for war by blowing facts
out of proportion. This is just our take on the whole matter and not necessarily true, although someone will have
to convince us otherwise, in a peaceful manner of course. The power of a lie must not be underestimated, especially
when people take it with hook, line and sinker…
In other words, the possibility of an US led invasion in Iran is a real possibility,
and if it happens, it will surely impact on MTN’s profit margin.
‘CEO Phuthuma Nhleko addressed potential future trouble spots, but there are very
few. Yes, there are long-term liabilities of R28.5bn, but MTN is pushing its group debts down to each subsidiary to
be more efficient. True, its launch in Iran was several months late after regulatory hassles and the tardy arrival
of some equipment. But with more than 15000 people joining its Iranian network each day, it expects to add a
mind-boggling 5,5-million users by Christmas’ (No sign of let-up at money-making machine MTN, Business Day, 30
March 2007).
In other words, according to MTN there are a few future trouble spots, although
nothing to worry about, because steps are taken to reduce the risks.
MTN Nigeria’s tax holiday has ended, will MTN
not take a knock from this?
MTN will take a knock, but not a big one, or at least not one big enough that they
won’t be able to handle.
‘MTN Nigeria will begin paying tax this year after a tax holiday ends. Nigeria is
MTN’s fattest cash cow, and the initial effect will push up the group’s overall tax rate from 30% to a punishing
52%. But MTN is growing so rapidly that even a swipe like that will be overcome’ (No sign of let-up at money-making
machine MTN, Business Day, 30 March 2007).
In other words, while MTN’s overall tax rate will be pushed from 30% to 52% when MTN
Nigeria starts to pay tax, it will not really have a major negative impact because of MTN’s rapid growth
rate.
ADSL South Africa (Broadband South Africa) welcomes MTN’s excellent
set of results. We hope this will encourage MTN to pass on even greater savings where broadband Internet is of a
concern in South Africa.
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