Telecommunications group M-Cell has reported a 21% increase in attributable earnings for the year to 31 March 2001, boosted partly by strong growth in the MTN subscriber base.
Chairman Irene Charnley says MTN subscribers grew by 55% over last year to reach 3.5 million. "The non-South African subscriber base increased by 166%," she adds.
"This has resulted in the contribution to revenue by the non-South African operations, although still relatively small, increasing from 2% of total revenue in the previous year to 5% of total revenue in the current year, an increase of more than 100%."
All the non-South African operations, with the exception of Cameroon and Nigeria, returned a positive contribution to headline earnings this year. A loss from non-South African operations of R74.7 million was reported.
Charnley says the group has had a successful year even though the telecommunications industry worldwide has suffered from a derating, driven primarily by the high fees paid by operators in Europe for third-generation licences and the heavy debt burdens incurred in the process.
"The acquisition of a cellular licence in Nigeria has been a significant milestone in the group`s quest to become the leading provider of communications services in Africa. MTN`s entry into Nigeria, which has a population of approximately 120 million, creates enormous opportunities for the group."
She also says the exploitation by the group of opportunities presented by the convergence in the telecommunications, media and technology sectors is also beginning to bear fruit.
M-Cell is seeking clarity on the recently published telecommunications policy directive, and submissions have been made in this regard.
"M-Cell is considering participating in the bidding process for the second network operator licence should the regulatory environment be conducive and economically viable," Charnley adds.
"The company is undertaking research and analysis to place it in a positive position to participate either directly or through an appropriate structure in the opportunity."
Charnley says the confirmation of the third cellular licence will provide certainty for the industry. The licence will stimulate the market, and MTN is well prepared for the entrance of new competition, she says.
"Due to the strong cash flow position of the group`s South African operations, the group is not entirely dependent on equity to fund expansion and can reasonably afford to carry significant levels of debt.
"However, foreign exchange regulations limit the amount of funds that can be taken offshore to fund growth."
The group is investigating funding alternatives for its offshore operations.
The M-Cell share, which lost 10c to close at R19.15 on the JSE yesterday, was trading 15c lower at R19 by late this morning.
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