MTN 6 month - Hurt by the currency

MTN released their first set of numbers under new management this morning, I'm pleased to see that the market reacted favourably to them. In constant currency the numbers looked okay, when converting everything back to Rands it looks rather horrible. In constant currency Revenues are up 6.7% (down 18.5% on actual currency) with Nigerian revenues up 11% and South Africa up 1.6%. The future of the business, data had a strong showing with a revenue increase of 31.9% or 9.6% in actual currency, with Nigeria growing by 70%, South Africa by 14% and Iran by 68%.

New management means a new vision for the company and a new culture to some degree, which is what shareholders were looking for. Below is what the new growth plan and focus will be for the company. My corporate speak is a bit rusty but if they can execute on what they plan to do, it looks good for the long term health of the business. I'm interested to see what the "digital" focus will entail, there has been talk that MTN might buy Multichoice's Rest of Africa operations.

"During the past six months the management team undertook a thorough review of the Group strategy and developed a clear growth plan for MTN that will be arranged under six strategic pillars comprising: Best customer experience; Returns and efficiency focus; IGNITE commercial performance; Growth through data and digital; Hearts and minds; and Technology excellence. We refer to this as the "BRIGHT" strategy."

One of my favourite stats from the telecom companies is what they have to do to achieve their growth, for the last 6 months they installed 4 404 3G towers and then a further 3 478 4G towers. They estimate that for the full financial year they will spend around R30 billion on CAPEX, around 13% of their market cap. The biggest chunk is allocated to South Africa with planned CAPEX expenditure coming in at R11.5 billion! With an improving political situation in Iran they are doubling their CAPEX spend to R3.9 billion.

As a long suffering MTN shareholder you will be in line for a R2.50 dividend at the end of August and then a projected R4.50 dividend in March next year, still a far cry from the R13.10 full year dividend paid two years ago. If you have ridden the share price over the last few years, it would make sense to keep ridding this one for a while longer to see how much of an impact the new management will have.