MTN hopes to be over the worst as it battles its way out of a “perfect storm” that has led to one of the most difficult half-year periods the multinational telecommunications group has faced in its 22-year history.

The JSE-listed group is now looking inwards as much as is feasible to find ways of better absorbing the impact of the mostly external factors that dragged MTN into the red during the six months to June 30.

MTN on Friday posted a basic headline loss a share of 271c for the six months ended June 30, with the multibillion-dollar Nigerian regulatory penalty shaving some 474c a share from earnings, followed by a 20c impact from hyperinflation and 136c apiece in losses incurred by TowerCo.

This was further exacerbated by 135c a share in foreign exchange losses and 73c a share losses attributable to the professional services employed to negotiate the reduction in the Nigerian regulatory fine.

“We have seen the worst of the perfect storm,” said MTN group executive chairperson Phuthuma Nhleko at the company’s interim results presentation in Roodepoort on Friday.

As MTN reported an earnings before interest, taxes, depreciation and amortisation (Ebitda) drop of 3.3% to R29.3-billion and an Ebitda margin decrease of 6.6 percentage points to 37.1%, the company cut its interim dividend payment nearly in half to 250c a share for the first half of this year, from the 480c declared in the prior corresponding period.

Revenue during the six months under review increased by 14% to R78.8-billion.

“MTN continued to operate in a challenging environment for the six months ended June. The financial performance for the period reflects the confluence of a number of material issues, which created the perfect storm,” Nhleko told shareholders.

The group has accrued the present value of N280-billion of the Nigerian regulatory penalty, which had a negative impact of R10.5-billion on reported Ebitda and a R8.6-billion negative impact on the group’s reported headline losses.

As MTN paid the first N80-billion tranche, its impact on the half-year under review’s cash flow amounted to R5.9-billion.

Further, some R1.3-billion in costs were incurred during the six months to June 30, on the professional services relating to the negotiations, an amount Nhleko justified, pointing out that it led to the saving of billions of dollars as US, South African and Nigerian law firms and other parties negotiated the reduction of the excessive fine for more than eight months.

“The board has exercised its judgement and approved the quantum of the professional fees incurred, taking into account global benchmarks and the value delivered, culminating in the final settlement of the Nigerian fine,” he said.

Going forward, the impact of the Nigerian regulatory fine will be limited to the unwinding of the finance cost element of the future payments over the settlement period, net of minority interests.

Also, the company would rather suffer the impact of the fine than the consequence of regulatory noncompliance, he said, with the group having disconnected 7.5-million subscribers in Nigeria, Cameroon and Uganda during the first half of the year.

Since October, the company had embarked on 18-million disconnections to ensure regulatory compliance.

The withdrawal of regulatory services in MTN Nigeria from July 2015 until May 2016, and disconnections of subscribers related to subscriber registration requirements, mainly in Nigeria, had also hurt the company’s bottom line for the period under review.

MTN’s underlying performance was also impacted by weak macroeconomic conditions affecting consumer spending, aggressive price competition and the underperformance of MTN South Africa, which had been hit by network outages, competition and economic pressure.

“The group has made strides towards resolving these challenges, although many of these factors fall outside of its control,” Nhleko pointed out.

Now, the group has commenced a “deep and fundamental” strategic review of its operations and processes to ensure it is functioning optimally and to “reset and position” the business for future growth in a rapidly evolving sector.

Unpacking the key features of the review, Nhleko noted that focus would be placed on operating efficiencies and improving customer service, along with continued network optimisation and improved operating expenditure management, as well as new revenue streams, particularly digital services, outside the core business.

MTN aims to establish an advanced analytics unit to drive network quality and high-speed data connectivity, provide compelling segmented offerings, improve customer service and increase targeted smartphone uptake.

“The group will also continue to seek value-accretive expansion opportunities in selected geographies across Africa and the Middle East,” he added.

The review is expected to be completed by the time Rob Shuter assumes the role of group president and CEO by July 2017.

Meanwhile, other appointments to support the group’s comeback included VP for mergers and acquisition and strategy Stephen van Coller, effective October 1, VP for the South and East Africa region Godfrey Motsa and deputy head of mergers and acquisitions Kholekile Ndamase, with effect from September 10.

Further, at the group level, Babak Fouladi has been appointed chief technology and information officer focused on South Africa for a period of 12 months, until the network is operating at an optimum level and higher quality, before taking on the group role.

CFO Brett Goschen is stepping down, effective September 30, with MTN Rwanda CEO Gunter Engling assuming the position of acting group CFO until a permanent CFO is appointed.

MTN also “refreshed the composition” of its local and group boards, with Stan Miller, Paul Hanratty and Nkululeko Sowazi appointed independent nonexecutive directors of the MTN group and Mike Harper, Mike Bosman, Lerato Phalatse and Trudi Makhaya appointed independent nonexecutive directors to MTN South Africa’s board.

“We are confident that by year-end we would have successfully completed our proposed management changes. In 2017, we will have a permanent and refreshed senior management team to take the group forward,” he commented.