Picture: REUTERS
Picture: REUTERS

MTN’s reduced dividend policy translated into a 30% cut in the payout shareholders will receive for the first half of its financial year.

MTN declared a R1.75 interim dividend on Wednesday morning, down from R2.50 for the first half of its 2017 financial year.

The statement indicated the final dividend will similarly be cut by 28% to R3.25 from R4.50.

"Despite continued challenges in repatriating funds from MTN Irancell, the board remains committed to plans to declare a total dividend of R5 per share for 2018 and is targeting growth of 10%-20% over the medium term," MTN group president and CEO Rob Shuter said in the interim results statement.

The cellphone network previously warned it intended reducing its dividend to whittle down its debt.

MTN’s debt increased to R70bn at the end of June from R57bn at the end of December. The results statement blamed this on "the payment of the final dividend under the previous dividend policy".

The group’s interim revenue declined by 3% to R63bn and its net profit declined by 5% to R4.9bn.

In its home market, MTN grew its South African revenue by 3.2% to R21bn, contributing 34% of the group’s total.

"MTN SA reported improved profitability on a strong consumer business, supported by our customer value management initiatives," the results statement said.

"However, growth in service revenue was below expectations on the slow turnaround of the enterprise business. Despite this, we started to see a stabilisation of enterprise towards the end of the second quarter after the appointment of new leadership."

Nigeria’s revenue declined by 4.7% to R17bn, contributing 27% of the group’s total.

Listing MTN Nigeria on the Lagos stock exchange is expected to be done by the end of 2018.

The group excluded Iran’s revenue contribution of R7bn from the total reported on the income statement. Revenue from Iran declined by 10.5% from the R7.8bn reported in the first half of 2017.

MTN was not able to repatriate any more cash from its Iranian business in the months before US sanctions were reimposed on the Middle Eastern nation, and the mobile operator expects a tough trading environment in that market.

On Tuesday, US President Donald Trump warned other countries against doing business with Iran after reimposing sanctions on the country.

He said that “anyone doing business with Iran will not be doing business with the US”.

MTN has about €200m of legacy cash in Iran, after repatriating about €88m from MTN Irancell by May.

“What we see there is now a lot of volatility in the exchange rates, and we were not able to arrange any further repatriations, so we’re still just stuck at the €88m we did earlier in the year,” Shuter said at the results presentation on Wednesday.

“And we see that it’s going to be a difficult trading environment for sure for the Iranians while the political pressures continue.”

MTN’s business in Iran performed well in the six months to end-June as the sanctions had not yet started to bite, Shuter said.

“But for sure it’s going to make things a lot more difficult going forward.”

MTN said on Wednesday that its service revenues for the six months to end-June rose 10.2%, beating its own guidance.

Earnings before interest, taxes, depreciation and amortisation rose 17% as margins grew.

This was thanks to strong growth in Nigeria, Ghana, and in MTN’s traditional voice business, Shuter said.

“We made very strong progress in our voice business, which I think people wrote off maybe too early many years ago — voice grew at around 6%,” Shuter said.