MTN scraps dividend as it turns to Africa for growth

The MTN Group on Thursday (6 August), reported service revenue growth of 9.4% to R80 billion for the six months ended 30 June.

It said that headline earnings per share of 430 cents was up 120.5%, however, no interim dividend was declared due to uncertainties resulting from Covid-19 impacts.

The group’s South African results disappointed with service revenue declining, and MTN announced that it will focus on Africa and exit the Middle East over the medium-term.

“As we navigate the pandemic and its effects, we have prioritised looking after our people, customers and networks while focusing on efficiencies,” said MTN Group president and chief executive officer Rob Shuter.

“As part of our ongoing portfolio review, we believe the group is best served to focus in the future on our pan-African strategy. We will therefore be exiting the Middle East in an orderly manner over the medium-term.

“As a first step we are in advanced discussions to sell our 75% stake in MTN Syria,” said Shuter.

MTN added 11 million subscribers in the first six months of the year to reach a total base of 262 million. By end June 2020, MTN had 102 million active data users and 38 million active Mobile Money users.

The group said it invested R10 billion in capital expenditure across all markets and brought a further 54 million people into 3G and 4G coverage.

MTN South Africa

MTN SA recorded a 2.5% decline in service revenue, as a result of the discontinuation of the group’s roaming agreement with Telkom and effects of the continued accounting for Cell C revenue on a cash basis.

“The continued turnaround in MTN SA’s consumer and enterprise businesses has, however, supported a pleasing improvement in sequential service revenue growth trend in the second quarter,” said Shuter.

At 30 June 2020, MTN said it had not recognised revenue amounting to R673 million for network roaming services provided to Cell C due to the reassessment of revenue recognition criteria and in compliance with IFRS 15.

In total, MTN recognised R788 million of revenue from Cell C during the period.

For the group’s South Africa operation, data revenue increased by 16.7%, however, fintech revenue decreased by 1.2%, and digital revenue decreased by 10.3%. EBITDA increased by 3.3% to R8.4 billion. Total subscribers increased by 137,000 to 29 million.

“The prepaid base has started to stabilise as the impact of the discontinuation of the 1GB promotion abated. At June 2020, prepaid subscriber numbers were down 349,000 to 22.5 million, while postpaid subscribers were up 486,000 to 6.6 million,” MTN said.

Included in the postpaid base, are 323,000 gross additions for short term university and college student deals.

Overall data revenue grew by 16.7%, supported by a 77% rise in traffic and an increase of 14.1% in active data subscribers to 14.2 million, MTN said of its local operation.

“While we expect the remainder of the year to be shaped by the ongoing challenges presented by the pandemic, we believe that MTN will remain comparatively resilient and is poised to sustain its growth over the medium term,” said Shuter.

Read: MTN set to sell stake in Jumia

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MTN scraps dividend as it turns to Africa for growth