MTN lifts profit, data unit robust

Johannesburg - MTN [JSE:MTN] reported a 9% rise in first-half profit on Thursday, as strong demand for its high-margin data services offset slow voice growth at home.

MTN said diluted headline earnings per share totalled 725 cents in the six month ended June compared with 665 cents a year earlier.

Headline EPS is the primary profit measure in South Africa that strips out certain one-off items.

MTN, which has operations in nearly two dozen countries in Africa and the Middle East, said sales increased 10% to R215bn, helped by favourable currency moves and a strong uptake of new users in its biggest market, Nigeria.

Growth in data

MTN CEO Sifiso Dabengwan said MTN delivered pleasing operational performance for the six-month period to 30 June 2014. "The group benefited from good growth in data and mobile money across key markets, but performance was tempered by tough competition, regulatory pressures and an overall weaker economic environment.

"MTN Nigeria delivered a robust performance and going forward expects to benefit from the growing demand for financial services and mobile content in this market," he said. "The South African operation remained under pressure, but we have started to see positive momentum in the second quarter following substantial actions to improve commercial performance.

“MTN made good progress on delivering on our strategy in the period. The group continues to improve operational and cost effectiveness as well as explore opportunities to expand our product offering outside of traditional voice into the digital space.

"Furthermore, the Group continues to benefit from our ongoing investment in the network, which enhances MTN’s offering and positions us for further growth."

Voice calls battle

MTN and Vodacom [JSE:VOD] are struggling to grow sales from voice calls at home as they slashed tariffs to defend market share and after the regulator ordered them to cut fees they charge one another to connect calls.

In response, both firms are rolling out high speed networks to meet strong demand for data as customers increasingly use their smartphones and tablets to browse the internet, stream videos and download applications.

Data consumption is expected to be the driving force behind the domestic mobile firms in the next few years. Earlier this year, Cisco Systems forecast South African mobile data traffic growth will compound at 53% in five years to 2018.

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