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Focus On: MTN Nigeria Capital Market Day 2023

#Africa50: Why Investing in Digital Infrastructure post-COVID-19 is Critical to Africa’s Recovery

#Africa50: Why Investing in Digital Infrastructure Post-COVID-19 is Critical to Africa’s Recovery

By Stephán Engelbrecht, Fund Management



The world is entering an unprecedented time and there is no historical playbook for what happens next. While not our base case, calamity risk is increasing (mass infections across South Africa [SA], with dire economic consequences), and nobody knows how to quantify this risk. We have many requests from clients asking for investment opportunities in this crash and we are happy to share our fundamental views. However, investors in any equities must bear in mind that, in the shorter term, cheap shares can get even cheaper and wild swings are likely. Our views are based on a 12-to 24-month timeline, with a base case scenario of the world normalising during this time period. So, risks have to be taken into account and any investment in equities should be considered in this context. Shares only become this cheap when risks are extremely high.



In times of extreme market volatility (and corrections), it is often unnecessary for investors to look far down the quality curve to find attractive opportunities that will generate significant returns in future. This is oftentimes the correct strategy as those economic uncertainties causing market volatility can have far more dire consequences for lower-quality businesses. This can make a company look inexpensive on the surface, but the upside might be limited as the business first has to struggle through an earnings trough, or raise equity to shore up its balance sheet which will, in turn, dilute current shareholder returns.



However, sometimes it is worth taking the risk. During market corrections, fundamentals are often ignored, and some market participants will sell a share at any price. It is at these prices where, we believe, the risk-return profile is so attractive that these counters deserve a small allocation in a diversified portfolio. These calculated risks may just turn out to be some of the best performers in an investor’s portfolio.



With that as background, we have scoured the SA market for some very exciting investment opportunities. We concede that these opportunities do come with some risks, whether it be debt, currency, regulation, liquidity or, in some cases, a combination of these factors, associated with them. Nevertheless, we believe that, at current valuation levels, the investor is more than compensated for such risks. So, put your hard hat on and prepare for some volatility although, at the end of the day, we are confident that a portfolio of these shares will reward investors handsomely.



MTN Group



If one were to draw up a list of countries where it is notoriously difficult to do business, and that also have extremely volatile regulatory and economic environments, the chances are that a large number of these nations will be among the 21 countries in which MTN operates. Initially, with major global mobile operators reluctant to enter these markets and regulations being fairly light, these countries held the appeal of attractive emerging market (EM) growth potential, with limited competition, for MTN. While this worked well in the beginning, over recent years MTN has appeared to stumble from one exogenous shock to the next – wars, extreme currency volatility, sanctions, exorbitant regulatory penalties and various lawsuits – but the company has weathered all these setbacks. MTN’s vulnerability to these exogenous events means that it is typically sold off, particularly aggressively during periods of risk aversion. This time around, the market sell-off was amplified by the collapse in the oil price, to which a number of MTN’s markets are vulnerable (especially Nigeria). With MTN’s share price falling below R40, the counter has now declined &gt;85% from its 2014 peak and it is currently trading at levels last seen in 2005.



In an industry where scale is critical, the significance of MTN being a top-two market share operator across all the markets in which it operates should not be underestimated. Where the telecommunications sector globally has largely been consigned by investors to the status of an ex-growth utility, MTN stands apart for several reasons. First, many of the Group’s markets still have further opportunities to increase penetration of mobile telecommunications and the potential to migrate those users to smart devices and drive data adoption. Second, while most developed market (DM) operators are confined to the provision of commoditised voice and data services, MTN is capitalising on opportunities to also add digital and mobile financial services.



Although MTN CEO, Rob Shuter has announced that he will be leaving the company at the end of his contract in one year’s time, he assembled a very competent management team during his tenure. Shuter has set the Group on a self-correction course. This includes the disposal of non-core assets, with proceeds being used to pay down debt (R14bn in sales were raised in the first year, with guidance of a further R25bn to be realised over the next few years) and paying particular attention to turning around some of the Group’s underperforming business units.



Since many of MTN’s new revenue streams do not require significant capital investment and are delivered through over-the-top platforms already in place, it has enabled the company to provide guidance of low double-digit revenue growth, margin expansion and relatively flat capital expenditure over the next 3-5 years. With the strong double-digit growth in free cash generation that this guidance implies, MTN is targeting annual dividend growth of 10%-20%.



Even at the bottom of the dividend guidance range, the prospective dividend yield is 15%, while the price as a multiple of expected earnings in 12 months’ time is 5x. No doubt, Brent Crude oil at below $30/bbl poses risk in the short term of foreign exchange availability and currency devaluation in Nigeria (MTN’s largest profit generator in FY19, accounting for c. 40% of group EBITDA). However, we are mindful of the oil industry saying, “the best cure for low oil prices, is low oil prices” and it is unlikely that the current situation will be sustained long term. At current levels, we believe there is now enough of a margin of safety in MTN’s share price to compensate for the risks it presents, with the potential for a strong recovery as current headwinds abate.



Investec



Over the past four decades, Stephen Koseff and Bernard Kantor created an institution. Built on the foundation of entrepreneurship and being agile and nimble to service its customers, the distinctive zebra logo became one of the most widely recognised symbols in SA financial markets.



In the early 2000s, Investec started to expand offshore with the UK being a key target market. Unfortunately, the UK’s highly competitive banking environment, ever more draconian and complex regulation and a global financial crisis (GFC) that hit just as Investec started to expand aggressively in the UK, made the experience far more lacklustre than the firm’s local successes. However, the company stayed the course, and, over time, Investec has built a strong UK presence.



Nevertheless, the UK remains a considerable drag on the Group’s profitability and ROE. Since the disastrous acquisition of Kensington in 2007 and the harsher regulatory environment post the 2008 GFC, Investec’s UK division has struggled to achieve a ROE greater than its cost of capital. This has resulted in Investec rightfully trading at a discount to its book value for significant periods since the GFC.



This discount to book value reached extremely low levels during the current sell-off, trading at close to 0.3x book. In addition, it coincides with some real positive changes taking root at Investec. The old guard has moved on and the new management team have taken decisive steps to improve the profitability of the bank.



Management unbundled the asset management division to make the structure less complex, committed to improving the cost-to-income ratio in the UK and promised that there were no sacrosanct segments of the business that will not be cut in the event of underperformance. We are still at the initial stages of the new regime and it will be interesting to see whether management can indeed improve the UK division’s ROE.



Although we acknowledge that Investec is not the highest-quality bank in the world and its earnings growth and ROE profile are far more volatile than its SA peers, we believe that the current share price provides an opportunity to enter at depressed multiples that more than sufficiently reflect the lower quality. And, the investor may yet benefit from an improvement in operating metrics as the new management team start their work.



Redefine



In recent years, many SA (and global) conservative investors squirrelled their savings away in property shares to earn an attractive, growing income. This bubble burst over the last few months and even the highest quality property companies have seen their value decimated. Selected YTD (to 25 March) declines among local property counters include Growthpoint (-45%), Redefine (-74%), Resilient (-46%), Nepi Rockcastle (-40%), Vukile (-63%), Attacq (-58%) and Hyprop (-60%). This follows already steep share price drops across the board in 2019.



The dire economic outlook for SA had already impacted Redefine’s share price hard when the novel coronavirus (COVID-19) hit and the whole property sector is now in crisis. These are unprecedented times and the world has changed in the last few weeks. Some tenants (especially in the retail sector) will earn little or no turnover for some time, and we have no doubt that they will want to renegotiate rentals with landlords. Some smaller tenants will go bankrupt. It is clear to us that the property sector will be reset after panic around the virus has subsided. Thus, the fate of many property companies is largely dependent on SA banks, who have very strong balance sheets and who, we believe, will be very co-operative in working with these companies to navigate the way through the current crisis. Although loan-to-value (LTV) ratio levels are all stated in the debt covenants for property companies, we think that the credit providers’ focus will turn from LTV ratios to interest cover, cash flow and sustainability. It is not in the interests of the banks to “pull the plug” on some of their biggest clients. We expect Redefine to work its way through this scenario together with the banks, with “reset” value emerging.



Management have acknowledged that they have no idea where rentals will settle, and they will largely depend on the health of the economy and the tenant. About 30% of retail turnover is from “safe” companies such as food retailers, cellphone companies and banks. Many office tenants will remain robust and industrial/logistics rentals will depend on tenant quality. So, it is not a disaster across the board, but months of hard negotiations will follow.



However, for investors, LTV ratios will remain a key metric and something which Redefine will have to address. At its last results presentation (FY19), Redefine had an LTV ratio of 43%. To highlight the spiral, if we assume the company had R100 of book value and R43 of debt – that 43% LTV is only just within its debt covenants. If the book value is written down by 25%, the LTV ratio goes up to 57%! Asset sales are usually a partial solution, but this looks increasingly unachievable. Withholding dividend payments becomes the next, and most likely, scenario. If a company can generate an 8% yield on book value (we are assuming no tax payable, which may be contentious), ploughing this back into debt repayments (as opposed to dividends), with a two-year dividend holiday, can reduce the LTV ratio from 57% to 41% – back into the covenant zone. We note that Redefine has already announced a delay in its interim dividend payment.



A big issue with withholding dividends is taxation. REIT (Real estate investment trust) legislation allows companies designated as such, to not pay tax and to distribute income to shareholders who receive the distribution as taxable income. If REITs do not distribute 75% of their income, then the current rules say they must pay tax on their income. We believe the property sector is in the process of negotiating with Treasury in an attempt to waive this rule – at least for a once-off time period.



We conclude that in a base-case scenario, the adjusted book value will be well below current book values, but higher than the share prices. We calculate that Redefine is fundamentally worth 50%-100% more than its current share price (unless Armageddon prevails!). But there is a high risk of shareholders not getting dividends for one, or even two, years. The share price is factoring in a far worse scenario than our base case. But investors should focus on the balance sheet and track closely the progress the firm makes in degearing.



There is a long road ahead, but we believe that, in the end, we will look back at this as a great opportunity to buy the share.



Northam Platinum



The platinum group metals (PGM) miners were the talking point of 2019. After being priced for bankruptcy in 2018, the price of the PGM basket recovered in 2019 resulting in the share prices of these miners rallying by 250% or more. The higher basket price helped these miners reduce their leverage with some of the mining companies going into a net cash position. It was a remarkable turnaround and highlighted just how cyclical the fortunes of these businesses are. Which begs the question, do you want to buy into such a cyclical industry in these uncertain times?



It is a fair question, and the answer very much depends on the risk tolerance of the investor. The reason why we are comfortable with a small position in Northam is due to the precarious demand-supply balance which the industry faced going into the COVID-19 crisis.



Prior to 2019, the threat of electric vehicles (EVs) caused the PGM basket price to remain below the breakeven price for mining companies and they battled to survive. Capital expenditure was cut across the board, with mining firms struggling to pay for maintenance capex, not to even mention expansionary capex.



Then, in 2019, the combination of a greater focus on carbon emission worldwide, the more enhanced testing after the VW scandal and the lack of R&amp;D in combustion engines over the preceding few years forced vehicle manufacturers to just add more and more PGMs in their respective catalytic converters as emission standards became more onerous. With the costs of PGMs &nbsp;a small fraction of the total vehicle production cost, they had the luxury to do this. Demand for these metals surged and the miners were not in a position to increase supply. This caused PGM prices to rally, with rhodium and palladium hitting all-time highs.



In our view, this situation will not change in the short- to medium-term, despite the COVID-19 outbreak and the subsequent decline in global vehicle sales. We expect demand to remain strong due to higher emission standards. Importantly, the threat of EVs, which are expected to be close to 50% of global vehicle sales by 2030, will prevent PGM miners from investing in new mines, thus keeping a constraint on the supply response.



Northam is one of the few PGM miners that will see strong volume growth over the next few years. Due to some tough decisions taken by management during the lean years, the company was able to shore up its balance sheet and it continued to invest in operations. As a result, we expect Northam’s annual production volumes to increase from c. 600k ounces this year to 1mn ounces over the next few years. Northam’s mines are also of a very high quality, operating at very low operating costs due to mechanisation. Trading at very attractive valuations and offering significant earnings (at spot PGM prices) and production growth, Northam is a high-quality operator in a very cyclical industry.



Alviva Holdings



Alviva Holdings is not an exciting company! But it is one of the Africa’s largest providers of information and communication technology (ICT) products and services. The Group has three business segments – ICT Distribution, which imports ICT hardware and software and sells it into sub-Saharan Africa via resellers, Services and Solutions, which provides system integration and ICT solution services, and Financial Services, which provides leasing finance to small-, medium- and micro-sized enterprises (SMMEs) for their ICT products.



The risks to this business are real. It is difficult to see Alviva continuing to operate in the same verticals and products as it is currently working, in five years’ time. This is due to the ever-changing industry in which it operates. For example, cloud storage and processing will, likely, fundamentally change the role ICT service providers play in the lives of their customers. To survive, ICT service providers will have to adapt their business models quickly and also ensure that they have a balance sheet strong enough to absorb any shocks.



We believe that Alviva has both these traits. It has a very experienced and conservative management team, which have navigated through some very turbulent times in the past and we maintain that management should be able to continue to do so in future. In addition, management have also been conserving cash. Over the past few years, they have adopted a very conservative dividend policy, paying out only 10% of earnings in dividends.



At our last engagement with management, they conceded that the operating environment is very tough at the moment, adding that they were very disappointed in the company’s performance but that it should improve in the second half. Management have guided that they will first look to retire around R400mn in preference shares, after which they will engage with shareholders regarding potential share buybacks. Admittedly, this was before the COVID-19 outbreak.



However, Alviva’s valuation is ridiculous – it is currently trading at a historic PE ratio of c. 2x and a normalised free cash flow yield of 50% (and we believe that we are being conservative here), so the risk-reward profile for investors is very much skewed to the upside. Liquidity is a concern and we highlight that investors should be patient if investing in this counter.

Our top share picks for the brave investor: Finding opportunities in times of adversity

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MTN reported muted revenue growth laying the blame on consumers being in a current difficult position. CNBC Africa&#8217;s Fifi Peters spoke to MTN CFO, Ralph Mupita, about a way forward for the company and how they dealing with regulators pushing for cheaper prices.

MTN on revenue growth

MTN on revenue growth, data prices & the relaunch of mobile money service

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CNBC Africa&#8217;s Fifi Peters spoke with MTN CFO, Ralph Mupita about the company’s full year results which saw a 9.7 per cent growth in its revenue boosted by a 12.6 per cent increase in Nigeria and 22.9 per cent in Ghana.

How MTN plans to deal with the oil crash

How MTN plans to deal with the oil crash, COVID-19

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MTN reported full year results with a 9.7 per cent growth in its revenue boosted by a 12.6 per cent increase in Nigeria and 22.9 per cent in Ghana. MTN Group president and CEO Rob Shuter spoke to CNBC Africa&#8217;s Fifi Peters about the numbers and the decision to step down from his role at the end of his fixed four year contract in March 2021.

Rob Shuter opens up on his biggest challenge at MTN

<figure class="wp-block-image size-large"><img decoding="async" src="https://www.cnbcafrica.com/wp-content/uploads/2017/02/mtn_-_flickr_1-1024x682.jpg" alt="" class="wp-image-86362"/><figcaption>The company said its board would find a new CEO during the year to enable a seamless handover. </figcaption></figure>



JOHANNESBURG (Reuters) &#8211; MTN Group Ltd, Africa’s largest mobile network by subscribers, said on Wednesday Chief Executive Officer Rob Shuter would step down from his role at the end of a four-year term in March 2021.



The company said its board would find a new CEO during the year to enable a seamless handover. 
Shuter, a former head of Vodafone Europe with a background in banking, took over from Sifiso Dabengwa in 2017, who resigned after Nigeria imposed a $1.7 billion penalty on the company for its failure to deactivate unregistered users. 
During his tenure, Shuter overhauled the telecom firm’s governance standards and is in the middle of a strategic revamp of MTN to hunt for returns in everything from financial services, music to video games. 
The company also said headline earnings per share (HEPS) rose 38.9% to 468 cents for the full-year ended Dec. 31 on the IFRS 16 accounting basis. On a like-for-like IAS 17 accounting basis, HEPS rose 61.7%. 



Revenue rose by 9.7%, while service revenue grew by 9.8%. 
“The group’s results were supported by double-digit growth in service revenue by both MTN Nigeria and MTN Ghana, while economic pressure, new data usage rules and a reassessment of recognition criteria for roaming revenue from Cell C impacted our performance in South Africa,” Shuter said in a statement. 
MTN, which competes with rival Vodacom Group, said it raised 14 billion rand ($876.70 million) from asset sales within the first 12 months of its three-year 15 billion rand divestment plan aimed at simplifying its portfolio. 
The company said it currently does not anticipate a material impact on its near-term network rollout plans due to the coronavirus outbreak and was developing contingency plans to mitigate the impact. 
Shuter said on a media conference call that due to the outbreak MTN had restricted non-essential travel a few weeks ago to some countries, including Iran, where it has operations. 



“We don’t really want people travelling in and out unless there is an absolute emergency,” Shuter said.

MTN Group CEO Rob Shuter to step down in March next year

JOHANNESBURG (Reuters) &#8211; MTN’s mobile money service will go live in January in South Africa, allowing customers to send, receive, save money and pay for goods using their mobile phones, the mobile operator said on Wednesday.



Last year group Chief Executive Officer Rob Shuter told a telecoms conference in Cape Town that the company would relaunch mobile money services in South Africa, three years after canning the service.



Shuter, who has experience in banking, is in the middle of a strategic revamp of Africa’s biggest telecoms group to hunt for returns in everything from financial services, music and video games.



“The introduction of this mobile money service is a pivotal step in MTN’s strategy and represents MTN’s participation in the next phase of increasing convergence we are seeing between financial services and mobile technology,” MTN South Africa CEO Godfrey Motsa said in a statement.



The service, called MoMo, will run on the Ericsson Converged Wallet. During the initial phase it will be available to MTN customers and offer basic services such as sending money to any mobile phone number in the country, buying prepaid services like electricity and paying for purchases at selected till points, the firm said.



MTN will kick off the service in a country where about 11 million South Africans remain unbanked, while 50% of the adult population remains thinly served, according to MTN South Africa Chief Officer of Mobile Financial Services, Felix Kamenga.



“MoMo aims to bridge this gap with this innovative mobile money offering, providing a payments solution that encourages financial inclusion,” he added.



The announcement comes months after a subsidiary of MTN Nigeria was granted a “full super agent” licence by the Central Bank of Nigeria that would allow it to provide financial services.



Reporting by Nqobile Dludla; Editing by Mark Heinrich

MTN South Africa’s mobile money service expected to go live in Jan 2020

Africa’s largest mobile operator by subscribers said in a quarterly update on Thursday that certain conditions related to the transaction had not been met, which led to the company’s decision.



Chief Financial Officer Ralph Mupita said on a call with reporters that the bid for MTN’s stake in the business had been unsolicited, and it was for now no longer being held for sale.



“In the longer term, if somebody came with a very attractive offer for the business, we’ll apply our minds then,” he said.



A 15 billion rand ($1.00 billion) divestment plan is making “steady process”, Mupita said, adding that the company was in advanced discussions around the disposal of a 49% holdings in ATC Ghana and ATC Uganda, which it values at 7 billion rand and 8 billion rand, respectively.



MTN is reviewing a raft of investments under a three-year plan that includes shedding loss-making e-commerce assets and exiting countries where it has no prospect of reaching the top-two spots in terms of market share.



It is aimed at slimming the company down and honing its focus on high-growth markets on the continent and in the Middle East after clashes with regulators in Nigeria, Uganda and elsewhere crimped growth.



It said on Thursday its service revenue for the nine-months to Sept. 30 rose by 9.6% year-on-year, buoyed by strong performances from its Nigeria and Ghana operations.



However, in its home market South Africa, where a sluggish economy, high unemployment and rising living costs have hurt consumer finances, service revenue over the period was flat.



($1 = 14.9979 rand)



Reporting by Emma Rumney; Editing by Muralikumar Anantharaman and Rashmi Aich

MTN has cancelled $300 million stake sale in Mascom Wireless Botswana, here’s why

JOHANNESBURG (Reuters) &#8211; MTN Group Ltd said on Tuesday the chief executive officers of its Zambian and Cote d’Ivoire units would step down at the end of the month.



Africa’s largest mobile phone operator said Zambia’s Philip van Dalsen, who joined MTN in 2012 as CEO of MTN Cyprus, would be replaced by MTN Rwanda CEO Bart Hofker, in October.



Mitwa Kaemba Ng’ambi has been appointed as the new CEO of MTN Rwanda.



The firm said Freddy Tchala, its Cote d’Ivoire CEO, who had a 17-year stint at the firm, would also be leaving at the end of September with his replacement still to be announced.



Spokeswoman Karen Byamugisha said van Dalsen and Tchala are both stepping down due to personal reasons.



MTN has a presence in 21 countries in Africa and the Middle East.



Reporting by Tanisha Heiberg; editing by Jason Neely

CEOs of MTN’s Zambia and Cote d’Ivoire units are stepping down

ABUJA (Reuters) &#8211; Shares of MTN Nigeria hit a three-month high on Friday after the telecoms company’s offices partially reopened following a shutdown due to anti-South African attacks in the West African country.



The local units of South Africa’s MTN Group and supermarket chain Shoprite, closed all stores and service centres in Nigeria after their premises were attacked following days of riots in their home country chiefly targeting foreign-owned, including Nigerian, businesses.



The violence in South Africa has strained relations between Africa’s two biggest economies, with Nigeria saying on Thursday it would recall its top diplomat to Pretoria.



MTN Nigeria said its stores remained closed on Friday but skeletal office operations were resuming, its spokesman said, adding that staff were asked to stay at home for safety reasons.



Shoprite stores remained shut except for one in an upmarket area of the capital Abuja, a manager there said.



Shares in MTN, Nigeria’s second-biggest listed firm, rose 5.03% to 139.80 naira each, a level last seen in June. Johannesburg-listed Shoprite shares were up 1.8%.



Prior to the shutdown, the telecoms firm last week launched a mobile money transfer service, targeting Nigerians without bank accounts, and said it planned to become a payment services bank once it obtains approval from the central bank.



Reporting by Chijioke Ohuocha; editing by Jason Neely and Emelia Sithole-Matarise

MTN Nigeria shares hit 3-month high after the telecoms company partially reopens

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In a conversation, MTN Group CFO, Ralph Mupita outlined telcos plans to roll out 5G as well as touch on matters that have been making headlines in the East African region. He caught up with CNBC Africa&#8217;s Kopano Gumbi for more.

MTN Group CFO Ralph Mupita outlines 5G rollout plans for Africa

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MTN Group says the listing of its Nigerian unit on the local bourse is a step in the right direction towards increasing local ownership in MTN Nigeria. Seun Ameye, Fixed Income Trader at CITI Nigeria joins CNBC Africa to discuss the expected impact of the listing on Nigeria’s capital market.

MTN Nigeria plans to raise debt in future

ABUJA (Reuters) &#8211; MTN Nigeria announced plans to float its stock in Lagos on Thursday in a deal valued at $6 billion, following the South African telecoms group’s agreement with Nigerian regulators to settle a long-running dispute.



Nigeria, MTN’s biggest market with 52.3 million users in 2017, accounts for a third of the Johannesburg-based company’s annual core profit, but it has faced problems in the country in recent years.



In December, MTN agreed to make a $53 million payment to resolve a dispute in Nigeria. The move ended a multi-billion dollar dividend repatriation row, hitting its share prices in Johannesburg.



MTN on Wednesday said the listing price was set 90 naira, determined from private over-the-counter share deal by existing shareholders over the past six months. It has said it would list 20.4 billion shares on the Nigerian bourse. The price values the telecoms company at 1.84 trillion naira ($6 billion).



MTN, owned 78.8% by South Africa’s MTN Group, has been one of the main beneficiaries of Nigeria’s push to liberalise its economy over the past two decades. But it has come under increased pressure from the government to boost local ownership.



MTN Group CFO, Ralph Mupita said the listing was an important step towards increasing local ownership in MTN Nigeria and building the country’s equity capital markets. Nigerian investors own 19.4% of MTN Nigeria.



The company also said it was relying on local funding in naira to mitigate exchange rate volatility, adding it was arranging local naira financing.



MTN Group said the company has received approval from the Nigerian Stock Exchange to list its shares on Thursday, giving its existing shareholders access to trade their shares on the bourse.



The company also said the Nigerian unit will raise debt, adding that the total level rose 44% to 252 billion naira ($823.66 million) in the first quarter.



“This is just the beginning, we still intend to pursue a future public offer giving more Nigerians greater access to the MTN opportunity,” Ferdi Moolman, chief executive of MTN Nigeria, said.



MTN decided to list its local company in Nigeria in 2016 after agreeing to pay a $1.7 billion fine to settle a SIM card dispute with the government. Earlier, the company said it planned to list in the first half of 2019.



The company said capital expenditure in the first quarter, rose to 63 billion naira, the bulk of which went to upgrade its network, up from 18 billion naira same period last year.



Service revenue grew 13.4% to 282 billion naira in the first quarter, driven by a rise in voice and data income and the addition of 2.1 million mobile subscribers.



Earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of operating profit, reached 150.4 billion naira ($492 mln) in the three months to March 2019, up from 123 billion naira a year earlier, MTN said.



MTN said it targets a dividend payout ratio of at least 80% of its net income in the medium term.



($1 = 305.95 naira)



Reporting by Chijioke Ohuocha; Editing by James Emmanuel and Louise Heavens

What you need to know about MTN Nigeria’s plans to list shares in Lagos in $6 bln flotation

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The Federal High Court in Lagos has ruled against the preliminary objection filed by Nigeria&#8217;s Attorney General in response to the three billion Naira suit filed against him by telecoms operator MTN Nigeria. The court ruled that MTN Nigeria met the deadline to respond to the tax demand levelled by the Attorney General of the Federation. Theophilus Emuwa, Managing Partner at AELEX joins CNBC Africa to discuss this story.

Understanding MTN Nigeria’s legal battle with attorney general

LAGOS/JOHANNESBURG (Reuters) &#8211; MTN Group, Africa’s biggest mobile operator, will keep engaging with Nigerian authorities to resolve a $10.1 billion dispute with the west African country, but is putting its faith in the courts to protect itself, its CEO said on Monday.
The telecom firm, which makes about a third of its annual core profit in Nigeria, has said the allegations are without merit, but added that no further negative steps have been taken by authorities in Nigeria.
Nigeria’s central bank on Aug. 29 ordered the South African firm and its lenders to bring $8.1 billion back into Nigeria that it alleges the company sent abroad in breach of foreign exchange regulations. MTN also faces a $2 billion tax demand from the country’s attorney general.
MTN has denied any wrongdoing, and filed a court case against the central bank.
“We have continued engagement with authorities, exchanging documentation and there is genuine will to reach an amicable situation,” MTN’s Chief Executive Officer Rob Shuter said on a conference call.
“However, we need to protect ourselves and we are relying on the courts in Nigeria to make sure there’s an amicable resolution.”
A court hearing between the central bank and MTN on the $8.1 billion repatriation case is scheduled for Tuesday.
Shuter said investors should note that the company did not expect a resolution to come through then.
“No further negative steps have been taken by the authorities in Nigeria, however it is important to keep legal steps going,” Shuter said, adding that MTN was not carrying out any repatriations from Nigeria for now.
“Tomorrow (Tuesday) we are likely to have an adjourned date because more information will likely be requested, however, it is important to create an environment to look for continued solutions.”
Shuter said although it had been a difficult quarter due to the regulatory challenges in Nigeria, the company still managed to put in a strong performance in Africa’s biggest economy with data revenue growing.
MTN said its debut stock market listing in Nigeria may slip into early 2019 because it needs to work on the format for the share sale.
It reported a 1.1 percent rise in quarterly user base, helped partly by strong performances in Nigeria.
The company said its user base increased by 2.5 million subscribers to 225.4 million users in the quarter ended September, and mobile money customers grew by 1.7 million to 25.8 million users.
Mobile money customers charge their phones with cash, and send it to friends or family via the short message service. These counterparties can then make similar transfers or cash in their credits with pre-approved agents, such as merchants or banks.
Reporting by Didi Akinyelure and Chijioke Ohuocha in Lagos and Tiisetso Motsoeneng in Johannesburg; Writing by James Macharia; Editing by Emelia Sithole-Matarise

Here’s what MTN is relying on to end dispute with Nigeria

JOHANNESBURG (Reuters) &#8211; MTN Group, Africa’s biggest mobile operator, reported a 1.1 percent rise in quarterly user base on Monday, helped partly by strong performances in Nigeria, its largest but increasingly problematic market.
The company said its user base increased by 2.5 million subscribers to 225.4 million users in the quarter ended September, and mobile money customers grew by 1.7 million to 25.8 million users.
Mobile money customers charge their phones with cash, and send it to friends or family via the short message service. These counterparties can then make similar transfers or cash in their credits with pre-approved agents, such as merchants or banks.
MTN is embroiled in a $10.1 billion dispute with the west African country of Nigeria, which has accused the company of illegally sending money abroad.
The telecom firm, which makes about a third of its annual core profit in Nigeria, said the allegations are without merit.
Nigeria’s central bank on Aug. 29 ordered the South African firm and its lenders to bring $8.1 billion back into Nigeria that it alleges the company sent abroad in breach of foreign exchange regulations. MTN also faces a $2 billion tax demand from the country’s attorney general.
“We continue to engage with relevant authorities on these matters. We remain resolute that MTN Nigeria has not committed any offences and will continue to defend this position vigorously,” MTN said while posting the quarterly results.
Reporting by Tiisetso Motsoeneng, Editing by Sherry Jacob-Phillips

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