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margin also benefited from a R6 billion once-off profit early in the year when we exercised the
right to exchange MTN’s interest in Nigeria Tower InterCo B.V (INT) for a larger shareholding in its
parent IHS Holding Limited (IHS). This was part of our work to simplify our exposure to Nigerian
tower assets.
At year end, we recorded a R2,8 billion loss through the income statement on the derecognition
of a long-term loan we had made to INT when MTN had originally sold the group’s 8 800 Nigerian
towers in 2014 and 2015. In exchange for writing off the loan, we agreed certain network volume
commitments and more attractive commercial terms for all new tower leases from 2018. This will
allow MTN Nigeria to invest in its network more efficiently and supports the further rollout of
broadband and data services in the country.
Overall, we reported improved results for the group, generating headline earnings per share of
182 cents**. The board declared a final dividend of 450 cents, bringing to 700 cents the total
dividend for the year.
The balance sheet remained strong, with gearing on a consolidated basis at 1,2x net debt:EBITDA
and operating free cash flow improving to R11,4 billion.
Q
What key financial challenges did the group face?
A
The main challenge was volatile and weakening currencies. A weakening of currencies against
the rand impacted rand-reported results, and a weakening of currencies against the dollar
impacted local operational expenditure as well as capital expenditure in countries where we
have costs denominated in dollars.
Economic conditions were challenging across many of our markets. However, there were some
early signs of recovery with our two largest markets – Nigeria and South Africa – emerging from
recession in the year. In Iran, economic growth slowed.
Despite stable-to-improving oil prices and oil production averaging two million barrels per day,
Nigeria experienced a weakening naira and challenges with the availability of hard currency. The
launch in April 2017 of the Nigerian Autonomous Foreign Exchange (NAFEX) market led to a
clear improvement in liquidity, but by year end the naira was 27,4% weaker against the rand. The
rand also gained ground on the US dollar, rial and cedi, ending the year 10,7%, 22,8% and 16,1%
stronger respectively.
Q
What progress did MTN make on embedding effective risk and compliance
practices?
A
This is a critical element of the ‘hearts and minds’ pillar of our BRIGHT strategy. We further
enhanced key risk frameworks and methodologies to ensure consistent application across the
organisation, and introduced new risk appetite and tolerance methodology. We also made
significant progress in our approach to managing compliance.
MTN Group Limited
Integrated Report 2017
33
Strategic and
financial review