Mobile operator MTN on Thursday (12 August) reported a 10% drop in headline earnings per share to 387 cents for the six months ended June 2021.
Group service revenue grew by 2.1% – however, in constant currency terms, service revenue increased by 20% in H1 to almost R82 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) before one-off items increased by 24% to nearly R39 billion, the operator said.
Reported HEPS were impacted by several non-operational and one-off items, which included accounting adjustments relating to its Middle East portfolio and material Covid-19 donations to the AU for vaccines and the Coalition Against Covid-19 (CACovid) in Nigeria, MTN said.
Excluding these items, adjusted HEPS increased by 31.5%. This supported the further expansion of MTN’s adjusted return on equity (ROE), which improved to 18.3% YoY, from 14.1% before.
MTN noted that the solid results were delivered despite a 2.3 million decline in the number of subscribers to 277.3 million, due to new industry-wide SIM registration regulations in Nigeria. These included a ban on new SIM activations, which was lifted in April 2021. New additions in Nigeria have since remained muted, as expected, owing to the new registration requirements.
Excluding Nigeria, group subscribers increased by 5.4 million, “and we expect subscriber growth to normalise over time as more of MTN’s enrolment centres in Nigeria are certified for SIM registration. Active data subscribers increased by 3.1 million to 117.4 million,” said MTN group president and CEO Ralph Mupita.
Active Mobile Money (MoMo) customers increased by 27.9% year-on-year (YoY) to 48.9 million, while the value of MoMo transactions was up 88.3% YoY to $115.2 billion
MTN decided against interim dividend, in line with its 2021 guidance. The board of directors of MTN have suspended dividend payments until March 2022.
“Notwithstanding the many challenges presented by the Covid-19 pandemic, MTN delivered a solid H1, exceeding most of the group’s medium-term targets through sustained commercial momentum as we executed on our Ambition 2025 strategy,” said Mupita.
MTN South Africa
All MTN South Africa’s (MTN SA) business units recorded good growth, MTN said.
- Service revenue increased by 9.3%
- Data revenue increased by 12.3%
- Fintech revenue increased by 6.4%
- Digital revenue increased by 28.6%
- EBITDA increased by 16.4% to R9.8 billion
- EBITDA margin increased by 1.5pp to 41.4%
- Capex of R3.2 billion on IFRS reported basis (R3.0 billion under IAS 17)
Higher gross additions and stabilised churn resulted in the number of subscribers increasing by around 665,000 to 32.7 million. This was driven by an increase of around 506,000 in postpaid subscribers to 7.3 million, which recovered well amid less-stringent lockdown restrictions, more data value offers, and churn management, the operator said.
In June 2020 the postpaid subscriber base had benefited from short-term university and college deals offered to support students during the height of the Covid-19 restrictions. In H1 2021, prepaid customers increased by about 159,000 to 25.4 million supported by growth in 4G data customers.
Data was a key driver of the strong revenue growth, MTN said. Data revenue increased by 12.3%, supported by a 56.5% YoY rise in traffic, an increase of approximately 56,000 (up 11.1% YoY) in active data subscribers to 15.8 million and a 30% decline in the effective data rate as MTN SA worked to ensure greater data affordability for customers.
In the past year, MTN SA said it has reduced its sub-1GB 30-day bundle by approximately 45%. An active prepaid data subscriber now consumes over 2GB of data, on average, a month. An active postpaid data subscriber uses over 10GB of data per month.
The consumer prepaid business sustained its growth momentum. Service revenue increased by 4%, driven by strong distribution execution, smart commissions and advanced CVM initiatives.
“Service revenue growth slowed slightly from 4.4% in the first quarter to 3.6% in the second quarter as we marked the anniversary of the impact of a strong Q2 2020 which benefited from a strong uplift in data consumption driven by Covid-19,” the group said.
The consumer postpaid business remained resilient in a highly competitive trading environment, generating healthy service revenue growth of 7.3% for the half.
This was supported by subscriber growth driven by channel expansion, specifically the online channel, well-managed churn, as well as the consistent drive of SIM-only and data-orientated packages. This integrated mix contributed significantly to the growth, the group said.
MTN’s InsurTech business, through aYo, a hospital cover and life cover product, currently has 6.3 million active policies with a 2025 target of 30 million policyholders.
MTN said that the structural separation of the fibre business is also underway and is targeted to be completed in the next two years.
“Our exit from the Middle East, in line with the pan-African focus of our strategy, is underway. The group has initiated an exit of Syria, through abandoning the operation given regulatory actions and demands that make operating in the market untenable,” said Mupita.
“We reserve our rights to seek redress through international legal processes given the actions of the Syrian authorities that have left us with no other choice than to exit. In H1, MTN Syria represented less than 1% of MTN Group EBITDA, before deconsolidation in February 2021. Exploration of the options to exit Yemen and Afghanistan in an orderly manner is ongoing and we will keep the market updated as the processes develop.”
Looking ahead, Mupita said the group remains focused on executing on Ambition 2025, driving growth, deleveraging the Holdco balance sheet, and unlocking value while navigating the impacts of the pandemic.
“We maintain our group capex guidance of approximately R30.1 billion for the year, on current currency assumptions, as we remain committed to investing in the capacity and resilience of all our networks as well as scaling our platforms to drive accelerated growth and achieving our medium-term targets.”