Phuthuma Nhleko, Chairman of MTN Group has released his comments on the third quarter result. See below:
“During the quarter the Group embarked on a material transformation project, focusing initially on its key operations of Nigeria and South Africa.
A dedicated transformation office was established to drive this transformation to maximise revenue growth, enable a distinct customer experience and ensure operational efficiencies, including concerted initiatives to drive optimal return on investment, with hard targets set for the next 12, 18 and 24 months. Operations are expected to deliver the first results on clearly defined targets in the first half of 2017.
Over the past 12 months the Group has made a number of senior management changes to ensure efficient operational execution, enhance stakeholder engagement, manage reputational risk and ensure solid governance across its operations. The appointment of a new Group Chief Financial Officer as well as the few other outstanding senior management changes and appointments will be concluded by year end.
Following the announcement of senior management changes made on 20 June 2016 we are pleased to announce that the starting date for new Group President and CEO Rob Shuter has been brought forward. Rob will be joining us on 13 March 2017. With the completion of my two key mandates of settling the Nigerian regulatory fine and appointing a new Group President and CEO Iwill revert to my role as non-executive chairman as soon as Rob assumes his position as Group President and CEO on 13 March 2017.
In the interim, whilst I will continue as executive chairman to provide oversight, I will delegate more operational responsibilities to Gunter Engling, acting CFO and Stephen Van Coller, VP M&A and Strategy. I will also ensure that all outstanding senior management appointments are completed and the new senior management team is fully settled in before year end.
During the quarter, we appointed Felleng Sekha as Executive: Regulatory Affairs and Public Policy, effective 10 October 2016. Felleng brings experience in management of political, public policy, legal and regulatory affairs in the African ICT sector.
Despite a tough operating environment as a result of weaker macro-economic conditions, particularly in oil-dependent economies, as well as the regulatory challenges experienced, we are confident that the fundamental changes implemented over the past year position the Group well to participate efficiently and effectively in the data evolution and ensure sound stakeholder relationships and governance processes.
During the period under review, the South African business delivered a pleasing QoQ sequential improvement in both revenue and margin. Revenue improved by more than 3,6% QoQ while the EBITDA margin expanded by more than 200 bp QoQ. MTN South Africa expects to maintain this improvement in EBITDA margin in the fourth quarter. After reporting a YoY decline in revenue in the first and second quarter of 2016 of 6,2% and 3,3% respectively, in the third quarter MTN Nigeria’s revenue YoY decline was limited to 1,2% as the business continued to experience incremental improvements in revenues. We are confident of delivering positive YoY revenue metrics in the fourth quarter.
We are pleased to report that we have commenced the repatriation of cash from MTN Irancell to the Group and expect to conclude the process over the next six months. MTN issued a SENS announcement on 28 September 2016 in which MTN Nigeria’s CEO Ferdi Moolman refuted allegations made on the floor of the Senate that MTN Nigeria had improperly repatriated funds from Nigeria. Ferdi Moolman said that “The allegations made against MTN Nigeria are completely unfounded and without any merit.” MTN Group Limited Quarterly update for the period ended 30 September 2016 MTNGroup Limited Quarterly update for the period ended 30 September 2016 3 In the latest development on this matter, the Senate of the Federal Republic of Nigeria has through the Senate Committee on Banking and Insurance and other Financial Institutions commenced an investigation into the alleged “unscrupulous violation” of the Foreign Exchange (Monitoring and Miscellaneous) Act. MTN Nigeria, four commercial banks, certain MTN Nigeria directors and shareholders, the Central Bank of Nigeria and others appeared before the Senate on 20 October 2016 at the outset of this investigation.
The allegations are that $13.97 billion was repatriated illegally by MTN Nigeria through its bankers. MTN Nigeria and its bankers are cooperating with the investigation with a view to resolving the matter as expeditiously as possible. In the interim the CBN has instructed the banks to suspend any remittance of dividends until further notice.
MTN Nigeria is committed to the payment of the N330bn fine related to the late disconnection of ‘improperly registered’ SIMS and as such has not declared a dividend since April 2015 and MTN Nigeria has no intention to make any dividend payments over the next six months. MTN Nigeria continues to refute the allegations that MTN Nigeria had improperly repatriated funds from Nigeria. Consequently MTN Nigeria will strongly defend any action that would be prejudicial to its interest.
