MTN South Africa, a division of MTN Group, is prepared to spend between R4bn and R5bn in the next six to 12 months to make its network more efficient and resilient during Eskom blackouts. This expenditure is a drag on MTN's earnings.
MTN is pouring billions of rands to make its telecommunications network resilient against the impact of Eskom blackouts -- an expense that is gnawing at its earnings.
MTN is prepared to spend between R4-billion and R5-billion in the next six to 12 months to make its network more efficient and resilient.
But doing so is starting to knock MTN's earnings because more money is being directed towards backup electricity measures to keep its network operational (especially during higher stages of blackouts), instead of growth-inducing measures.
Pressures can be seen in MTN South Africa operations: service revenue (money MTN makes from things such as airtime usage and monthly access charges to its network) rose by 1.9% to R20.4-billion during the six months ending 30 June. Historically, MTN South Africa's service has grown in double digits.
The South African operations also recorded a 6.8% decline in earnings before interest, tax, depreciation and amortisation (Ebitda), which is a measure of operating profitability. And the Ebitda margin -- another measure of profits against generated revenue -- fell by nearly four percentage points to reach 36.1%. In other words, earnings and profits at the South African business are under pressure, with the situation mainly exacerbated...