EDITORIAL: Heed Mupita’s warning
Don’t forget to read the bad news in MTN’s earnings report
What’s not to like about MTN’s latest annual earnings report? The company put more than R6bn in shareholders’ hands via a dividend payout, made substantial headway in paying down its debt and showed tangible signs of recovery in its mobile money service.
But all that was overshadowed by how deepening power outages have jacked up costs in SA, where businesses and society endured load-shedding on more than 200 days in 2022 alone.
MTN took a nearly R700m hit on its core profit, or earnings before interest, tax, depreciation and amortisation (ebitda), as it stumped up for additional security and backup electricity to power its towers. Sadly, the pressure on margins is likely to remain as the company will need more backup power for the remaining sites.
In response, shares in MTN slumped more than 9%, their biggest intraday drop since December 2020. It is not a vote of disapproval for CEO Ralph Mupita, who is pushing through a coherent plan to shake off the image of MTN as a stock with limited growth prospects. It is a byproduct of the disastrous stewardship of the SA economy, which is also choking under extreme unemployment and Transnet’s well-documented failures to haul goods to SA’s ports.
Unless President Cyril Ramaphosa’s administration decisively tackles these challenges, we could not agree more with Mupita’s assessment that SA risks becoming a failed state, an outcome that will make the country a no-go zone for investors, lead to a punishing brain drain and send shock waves across the world.
We hope that Ramaphosa will use the state of disaster wisely to put SA back on a robust growth path.
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