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November 24, 2005

MTN reports increased profit as customer base expands

MTN Group Ltd, the second largest mobile operator in South Africa, has reported a strong set of interim results.

By CBR Staff Writer

For the six months ending September 30, the South Africa-based-based operator posted a net profit of ZAR 4.2bn ($643m), up from ZAR 3.2bn ($490m). The 31% jump in first-half earnings was driven by strong demand in Nigeria. Sales meanwhile rose 25.2% to ZAR 17.2bn ($2.63bn) from ZAR 13.7bn ($2.09bn) in the year-ago period.

MTN is Africa’s largest cell phone operator by sales, and during the six-month period it increased its customer base by 32% to 20.6 million. This puts it ahead of its domestic rival, Vodacom (Pty) Ltd which had 19.1 million customers at the end of September, although comparisons are difficult because the two companies are said to count their customer base differently.

During the period, MTN concluded acquisitions in Cote d’Ivoire (51%), Zambia (100%), and Botswana (44%), in line with its strategy of moving into emerging African markets. In South Africa, MTN’s subscriber base grew by 12% to 8.96 million. In Nigeria, it rose 38% to 7.67 million.

Besides its operations in Nigeria, Cote d’Ivoire, and Zambia, it has operations in Cameroon, Uganda, Rwanda, and Swaziland. MTN has also agreed to stake a 49% stake in a consortium running Iran’s second private mobile network, IranCell, a deal said to be worth some $2bn. However, this deal is not set in stone yet, as a court still has to rule on a complaint filed by rival bidder Turkcell.

Turkcell complained that Iran’s telecoms ministry had broken the terms of the original tender by allowing IranCell to be formed without specifying the foreign operator and then by negotiating with MTN.

Meanwhile, there has been intense speculation recently that MTN could be the subject of a foreign takeover battle, following the decision by mobile goliath Vodafone Group Plc to increase its holding in Vodacom to 50%.

However, MTN dampened takeover speculation and said it was no longer in talks that could affect its share price. Possible suitors were thought to include Orange SA, which is owned by France Telecom SA.

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