MTN registers buoyant performance amid recession

  • Profit increased by 12% compared to the prior year
  • Revenue grew by 13% in 2019
  • Concluded to dispose 49% equity holdings in Ghana Interco and Uganda Interco to AT Sher Netherlands Cooperatief U.A.

Mobile Telephone Networks (MTN), one of South Africa’s telecoms giant reported a revamped performance for the year 2019 in the face of recession and challenging macroeconomic fundamentals.

The mobile telecommunication company registered a 12% climb in profit to R10.6 million from R9.5 recorded in the previous year. Revenue increased by 13% to R151.4 million from R134.5 million.

The group’s results were supported by double-digit growth in service revenue by both MTN Nigeria and MTN Ghana, while economic pressure, new data usage rules and a reassessment of recognition criteria for roaming revenue from Cell C impacted our performance in South Africa.

The company registered an overall positive revenue growth. Service revenue grew by 9.8% to R141.8 billion, data revenue soared by 22.4% to R35 billion and Fintech revenue surged by 27% to R10 billion.

In the financial results, MTN said, “Group service revenue increased by 9,8% in constant currency terms. This was led by growth of 12,6% in MTN Nigeria, 22,9% in MTN Ghana and 0,4% in MTN South Africa. The performance of MTN South Africa was impacted by the implementation of ICASA’s end-user subscriber regulations and a reassessment of revenue recognition criteria due to delayed payments under the network roaming agreement with Cell C.”

Data revenue increased on the back of active data users growth which spiked from 16.6 million to 95 million active data users, the expansion in 3G and 4G coverage to an additional 45 million and 65 million people respectively as well as improvements in the quality of the data network across the group’s footprint.

The telecoms giant also attributed data revenue growth to improved data affordability for customers through micro-bundling and reduced out-of-bundle tariffs.

The rise in active data users follows the increase in subscriber growth to 251 million from 18.2 million subscribers which directly resulted in a 4.2% growth in voice revenue which stood at R82.1 billion.

Fintech revenue increased by 27,0%, enabled by growth of 7,5 million active Mobile Money (MoMo) users to a total of 35 million, generating a monthly ARPU of $1,15.

MTN declared a gross final dividend of 355 cents per share for the period to 31 December 2019.The dividend will be subject to a maximum local dividend tax rate of 20% which will result in a net dividend of 284 cents per share to those shareholders who bear the maximum rate of dividend withholding tax of 71 cents per share.

On 31 December 2019, after the reporting period, the group concluded an agreement to dispose of its 49% equity holdings in Ghana InterCo and Uganda InterCo to AT Sher Netherlands Cooperatief U.A. (ATC). The Uganda Interco transactions closed in February 2020 for cash proceeds of US$140 million (R2,2 billion) and realised a profit of approximately R1,2 billion. The group awaits the finalisation of regulatory approvals relating to the Ghana InterCo transaction.

On the outlook, the group expects price elasticity to improve data revenue growth in 2020, to further scale the basic mobile financial services products, deepen advanced services as well as increase their merchant base.

The company also plans to continue rolling out Ayoba into its markets and integrate payments into the Ayoba service as part of broadening their fintech business.

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