MTN announces revised strategy with R29 billion war chest

MTN on Wednesday (10 March) reported strong service revenue growth up 19.9% for the year ended December 2020, while subscribers increased by 28.8 million across all operations to 279.6 million.

The mobile operator reported growth of 14.6% in MTN Nigeria, but only 1.6% in MTN SA, while MTN Ghana soared 16.6%.

Reported headline earnings per share increased by 60% to 749 cents, while the group suspended the final dividend for 2020.

In the near-term, MTN said it is focused on de-leveraging the holding company and it reduced net debt by R12 billion, to R43 billion.

“MTN suspended the final dividend for 2020 due its near-term focus on faster de-leveraging of its holding company as well as three conditions which negatively impacted this objective. These related to uncertainties around cash upstreaming from Nigeria, the timing of ARP proceeds and Covid-19 impacts,” it said.

“In light of these material uncertainties, the board has also suspended the dividend policy and anticipates communicating a revised medium-term dividend policy when we announce our 2021 results in March 2022,” said president and chief executive officer Ralph Mupita.

During this transition, the board anticipates paying a total ordinary dividend of at least 260 cents per share for the 2021 financial year. “The board will consider returning further cash to shareholders in the form of special dividends or share repurchases after the release of 2021 results,” Mupita said.

Data revenue expanded by 31%, with a 110% increase in traffic brought about by higher levels of online demand resulting from the effects of Covid-19, including an increase in learn-from-home and work-from-home.

“We expanded our 3G and 4G coverage footprint adding 16.3 million and 55 million people respectively; invested in 5G in SA; recorded 140 million smartphones on our network; and reduced the effective rate per megabyte by 32.9%. Average data usage rose by 60% to 4.4 GB per month. Fintech revenue rose by 23.9%,” Mupita said.

The number of active Mobile Money (MoMo) users increased by 11.7 million to 46.4 million, generating a monthly ARPU of $1.2. The value of MoMo transactions was $152 billion and MTN processed 12,400 transactions per minute, up 35% from 9,200 in 2019.

“While Covid-19 accelerated the adoption of mobile financial services, growth in fintech revenue was moderated by reductions in transaction fees to support our customers, lockdown restrictions on agents and a slowdown in economic activity,” the chief executive said.

The group’s networks remained well-invested, with capex of R28.6 billion in 2020 and headroom to accommodate growth of more than 110% in data traffic in the year, Mupita said.

MTN also announced a revised strategy.

“Further to our previous announcement regarding our intention to focus on our pan-Africa strategy, we completed a comprehensive strategy review in Q4 2020 and are excited to introduce ‘Ambition 2025’,” he said.

“As part of this strategic repositioning, we are looking to structurally separate our infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses, over the medium-term.”

“Going forward, we believe that Ambition 2025 will position the business to capture the exciting opportunities across our markets and our medium-term guidance has been enhanced to reflect this accelerating growth outlook. To support this, we plan to invest approximately R29.1 billion in our network, fintech and digital services platforms in 2021.”

Read: MTN shares surge on expected earnings growth

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MTN announces revised strategy with R29 billion war chest