MTN shares up as company sees 20% dividend growth


Johannesburg – MTN [JSE:MTN] may exit markets that aren’t self-funding as chief executive officer Rob Shuter reviews the 22 countries in which it operates.

Africa’s largest mobile phone company by sales will also look at opportunities for expansion, potentially resulting in “some shifts in the current portfolio”, the carrier said in a statement on Thursday. MTN’s biggest markets are Nigeria, Iran and South Africa, but the Johannesburg-based company also has licences in small or war-torn countries such as South Sudan and Syria.

Reporting his first full-year results since becoming CEO, Shuter said the focus for 2018 was to slightly lower capital expenditure while setting a longer-term sales growth target of a percentage in the upper-single-digits, driven by Nigeria. He also sees dividend growth of as much as 20% a year, after cutting the payout for 2018 to R5 a share from R7 last year.

The shares jumped 11.55% to R136.75 as of 14:54 in Johannesburg. That values the company at R257bn.

Tumultuous period

MTN’s new targets come as it returned to full-year profit, enabling the company to move beyond a tumultuous period that began with a $5.2bn regulatory fine in Nigeria in October 2015. That led to the resignation of the former CEO and months of negotiations before it was eventually settled at $1bn, plus a listing of the local unit in Lagos.

The company is yet to claw back a share slump after the penalty was announced, and the stock has gained about 2% since Shuter joined from Vodafone a year ago.

“The cut in dividend was largely expected for 2018 – some were even expecting as little as R4,” Peter Takaendesa, portfolio manager at Mergence Investment Managers in Cape Town, said by phone. Referring to possible country exits, “the effort and returns versus the reputational damage in some of their markets is not worth it,” he said.

Headline earnings per share, which exclude one-time items, were R1.82 in 2018, compared with an earlier guidance of R1.70 to R1.90. Sales advanced by 6.8% on a constant currency basis.

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