MTN earnings to plummet

MTN Group has issued a trading statement to shareholders, warning of a substantial decline in earnings for the year ending 31 December 2024. The telecommunications giant expects to report a more than 100% decrease in earnings per share (EPS) and a significant drop in headline earnings per share (HEPS), with a decline between 59% and 79%.

Despite these negative projections, MTN remains optimistic about its underlying business performance. The company highlighted the relative stability of key macroeconomic factors, such as inflation and foreign exchange rates, in several of its major markets during the second half of the financial year. These conditions have provided some reassurance for the company as it continues to navigate its challenges.

MTN anticipates that its EPS for FY2024 will fall within a range of -781 to -736 cents, compared to 227 cents for the same period in 2023. This represents a significant drop of between -554 cents and -509 cents year-on-year. In addition, the group expects HEPS to fall between -186 and -249 cents, which marks a sharp contrast to the 66 to 129 cents reported in FY2023.

The company attributed the expected decline in earnings to several factors, including impairment losses on investments, goodwill, property, plant, and equipment, particularly in Sudan. These impairment losses are expected to total approximately -578 cents, compared to -40 cents in the previous year. Additionally, MTN is facing an impairment loss on the measurement of disposal groups, estimated at -8 cents, down from -50 cents in FY2023. The group is also experiencing a net loss on the disposal of investments in joint ventures, associates, and subsidiaries, amounting to about -36 cents, compared to no such losses in the previous year. Furthermore, a net loss on the disposal of property, plant, equipment, and intangible assets is expected to amount to approximately -7 cents, a stark contrast to the -1 cent loss in FY2023.

In addition to these factors, MTN cited negative impacts on HEPS due to hyperinflation adjustments, foreign exchange losses, deferred tax charges, and other non-operational items. These issues have collectively contributed to the group's disappointing financial performance for the year.

Looking ahead, MTN expressed confidence in the future of its South African operations, expecting an improvement in profitability, particularly in the second half of the financial year. The group remains focused on strengthening its core operations and enhancing profitability in the coming periods.

Despite the anticipated drop in earnings, MTN's share price rose nearly 4% in early trade on Thursday, indicating investor confidence in the company's long-term prospects. As MTN continues to address its challenges, it remains committed to its strategic objectives and looks forward to a more stable and profitable future.