S’Africa's MTN Profit Falls Short on Currency Swings

06 Mar 2013

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 A customer leaves an MTN shop in Johannesburg

MTN Group, South Africa's second-largest mobile phone company, fell short of expectations with a 2 percent rise in full-year profit on Wednesday, as foreign currency losses eroded profit from key markets like Iran.

MTN said headline earnings for the year to end-December came in at 1,089.1 cents from 1,068.6 cents in the previous year. Reuters StarMine estimates predicted a 14 percent jump to 1,218 cents, reports Reuters.

Headline earnings, the main measure of profit in South Africa, exclude certain one-time items.

The telecoms giant with business in 21 African and Middle Eastern countries increased subscribers by 15 percent to 189.3 million.

While still Africa's largest mobile firm by subscribers, MTN has recently been eclipsed in market value by Vodafone unit Vodacom.

Revenue rose nearly 11 percent to 135.1 billion rand.

It declared a dividend of 503 cents, from 476 cents in the previous year and said it was changing its dividend policy, with an aim to increase dividends by as much as 15 percent.

The $36.6 billion company said currency swings weighed on earnings, particularly the depreciation of the Syrian pound, Iranian rial and Sudanese pound.

The telecoms giant is facing a $4.2 billion lawsuit in a U.S. court for allegedly bribing officials to receive its Iranian licence, which had initially been awarded to rival Turkcell.

An MTN-sponsored investigation into the allegations dismissed the claims as "a fabric of lies, distortions and inventions", but the U.S. legal proceedings are awaiting a verdict on whether the Washington court has jurisdiction over the issue.

Bigger rival Vodacom is scheduled to report its earnings on May 20.

MTN shares are flat this year, compared with a 3.6 percent increase by Johannesburg's Top-40 index.

Tags: Business, South Africa, MTN, Profit, Currency, SWINGS

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