MTN Group Shares Slump, Cuts Spending to Preserve Cash During Virus Pandemic

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MTN Group Ltd. reduced spending plans for the full year to focus on preserving cash and maintaining networks as Africa’s biggest wireless carrier by sales navigates the Covid-19 pandemic.

MTN will invest 21 billion rand ($1.1 billion) to 22 billion rand in 2020, compared with an earlier guidance of 28.3 billion rand, the Johannesburg-based company said in a statement on Thursday. The group stuck with a medium-term growth forecast and said it’s committed to an asset-disposal plan kicked off last year.

Telecom firms have been among the more resilient to the coronavirus crisis as governments order populations to work and entertain themselves at home to contain the pandemic. MTN reported data-traffic surges in three of its biggest markets, South Africa, Nigeria and Ghana, from the end of February.

MTN shares declined 9.3% to 45.16 rand as of 4:19 p.m. in Johannesburg. The stock has slumped more than 40% this year, in part due to exposure to Nigeria, which is facing economic strife caused by the combined impact of the coronavirus and weaker oil prices. Crosstown rival Vodacom Group Ltd. is up 14% over the same period.

MTN first-quarter sales increased by 11%, while the carrier added 6.6 million subscribers to reach 257.3 million. That included a decline in service revenue in its home market, partly due to the loss of a roaming agreement with Telkom SA SOC Ltd.

The earnings before interest, taxes, depreciation and amortization margin widened overall to 43%, but narrowed in both Nigeria and South Africa. The company extended a license in Uganda, one of its 21 markets, to 2032 for about $100 million.

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