The South Africa-based company posted adjusted headline earnings per share to 278.5 cents for the six months to end-June, in line with its forecast of 273 to 283 cents and 27.5 percent higher than the six months to end-September 2005.
The company is changing its year-end and so did not provide a direct comparison in the results on Wednesday.
But some analysts said subscriber growth of 9.4 percent to 25.4 million was slower than expected and that scaled-back ambitions in Iran, which has major growth potential but is locked in a nuclear stand-off with the west, were a concern.
MTN has pursued an acquisition spree in recent years, culminating in the $5.5 billion purchase of Investcom in May, which made it the second-biggest operator in Africa and the Middle East with access to 10 new countries amid booming demand in some of the last untapped mobile markets.
Shares in the company added 0.7 percent to 59 rand, roughly in line with the Johannesburg Top-40 index.
MTN said it would launch Iran’s second mobile network in the latter part of September and aimed to chalk up 1 million subscribers there by the end of the year — fewer than the 1.5 million initially targeted.
“Earnings growth is in line with their forecasts but below mine, and the 1 million figure in Iran is disappointing,” said one Johannesburg analyst who asked not to be named.
SLOWER GROWTH AHEAD?
Some analysts worry that hefty spending in Iran and the impact of the Investcom acquisition, which now looks pricey due to higher emerging market risk premiums, might shrink MTN’s profit in the second half.
And while expansion means MTN can rely less on its home market, where it faces stiffening competition, some investors wonder whether it has bitten off more than it can chew, given risky new markets such as Iran, Afghanistan, Sudan and Syria.
MTN shares have fallen 6 percent so far this year, lagging the Johannesburg Top-40 index of blue-chip stocks, which has gained 21 percent. Some analysts say it now looks cheap at 10.7 times this year’s earnings, while its closest rival, Egypt’s Orascom, trades at 13.8 times earnings.
MTN said it expected further subscriber and revenue growth ahead but reiterated the Investcom deal would inhibit short-term earnings growth. It hopes the deal will yield synergies and aims to combine headquarters in Johannesburg by January 2007.
MTN’s subscriber growth was driven by growth in Nigeria and the addition of new markets in Africa. Customers in South Africa — its biggest market — edged up just 2 percent, but MTN said it expected faster growth in the second half.
“We have reversed the (downward) trend in Q1, and as one looks at recent figures, we are clearly going in the right direction,” Chief Executive Phuthuma Nhleko told a presentation.
Investcom, which will be consolidated in MTN results from July, boosted customers by 26 percent in the first half to 6.14 million and increased core earnings 36 percent to $255 million.
Even with Investcom, MTN is smaller than Orascom, which swelled its customer base to 41 million by the end of June and is still the biggest operator in Africa and the Middle East.
MTN focuses on adjusted headline EPS, which strips out capital, non-trading and certain one-off items as well as the impact of a tax credit linked to its Nigerian business.
