South Africa's MTN Group said half-year adjusted headline earnings per share could fall by between 8.6 and 13.6 percent for the six months to the end of June, worse than market forecasts, it said on Tuesday.

The company, Africa's biggest mobile phone operator by subscribers, also said it expects basic headline EPS to rise by between 19.8 and 24.8 percent.

The number they are guiding (people to expect) is probably worse than what the market is expecting, a Cape Town-based fund manager said.

But if you want to get an idea operationally how the company has performed over the last six months, I wouldn't place too much reliance on this one number because of currency fluctuations.

MTN, which is in merger talks with India's Bharti Airtel, said adjusted earnings were negatively hit by the stronger rand and unrealised forex losses on loans to and receivables from certain operations.

The company added that unrealised forex losses in the six months to end June also include losses on dollar denominated deposits.

MTN shares traded 0.7 percent lower at 127.56 rand by 1502 GMT, lagging a 0.3 percent weaker JSE Top-40 index .JTOPI of blue chips.

MTN, which operates in more than 20 countries in Africa and the Middle East, said the reversal of the impact of the put option that a shareholder has on the MTN Nigeria operations accounted for the difference between basic headlines EPS and adjusted headline EPS.

MTN is the biggest operator in Nigeria, Africa's biggest telecoms market, and growth there has driven profits in recent years. But it faces tougher competition from new rivals and analysts say upcoming results may show pressure on market share and profit margins.

MTN and Bharti have once again extended exclusive talks aimed at creating the world's No. 3 mobile firm, frustrating investors who wanted the deal to be finalised, and raising concerns the deal's structure was too complex to succeed.

Both firms agreed to extend talks to Sept. 30, after previously extending discussions by one month to Aug. 31, as they negotiate a complex $23 billion cash and share swap deal aimed at an eventual full merger.

Headline EPS, the main profit gauge in South Africa, excludes certain one-off, financial and non-trading items.

MTN is due to announce its result on Aug. 27 and investors will likely want to get more information regarding the deal with Bharti Airtel.

(Editing by David Holmes)

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