Tech giant, MTN Group, has said it will continue to invest aggressively in broadband coverage despite the challenges faced in the first half of this year.
The group said it had reported a resilient performance in the first half of 2022, balancing an accelerated investment into its networks, reducing the cost of communication and the delivery of solid financial results.
MTN said it advanced the delivery of its strategy under challenging conditions, which included macroeconomic and geopolitical volatility, global supply chain disruptions, constrained on-grid power supply in South Africa and greater regulatory requirements across many markets.
“Notwithstanding the tough macro conditions, MTN remained focused on investing in our markets to increase broadband coverage and to reduce the cost to communicate,” said President and CEO Ralph Mupita.
“We accelerated network investment to R17.1 billion and spent an additional R7 billion on securing 4G and 5G spectrum in the key markets of South Africa and Nigeria.”
The investment in networks increased access to broadband services to 85.5% of the population and led to an average 22.5% reduction in data tariffs.
R7.3 billion worth of taxes paid
MTN further said that it had contributed to society and economies, which included cash taxes of R7.3 billion paid to nation states in the period.
In constant-currency terms, service revenue grew by 14.8% to R92.5 billion; earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 15.1% to R43.9 billion before once-off items; and the EBITDA margin expanded by 0.3 percentage points to 45.3%. This was supported by the focused execution of our expense efficiency programme.
“Growth in data revenue was particularly strong, up 35.9%, driven by MTN Nigeria, MTN Ghana, MTN Cameroon and MTN South Africa,” said Mupita, adding that fintech revenue grew by 14.0%, with solid performances from Nigeria, Uganda and Ghana.
“The introduction of fintech taxes in some markets slowed revenue growth in Q2, but we remain encouraged by the ecosystem growth as users, agents, and merchants continued to grow healthily during the period under review, with transaction volumes growing by 31.5% during the period.”
MTN says, as part of their ambition 2025, they are building five-scale platform businesses on top of a very strong connectivity network.
The fintech platform is the most mature of these, and in the first half, it had 60.7 million Mobile Money users (up 24% year-on-year), generating six billion transactions worth $116.3 billion (R1.88 trillion).
The total number of MTN subscribers in the period was 281.6 million, up 5.6%.
Chief Financial Officer Tsholo Molefe said the Group accelerated the deleveraging of the balance sheet in the six months to end-June 2022, boosted by the repatriation of R9.4 billion in cash from operating companies, including R4.5 billion from Nigeria:
“We continue to explore opportunities for further liability management and remain focused on reducing the hard currency liabilities on our balance sheet.”
Underlying operating free cash-flow growth was strong at 24.0%, and return on equity increased to 24.2%, reflecting the consistent delivery of earnings.
“We accelerated our portfolio transformation, delivering R9.2 billion in asset realisations in the first half and bringing the total realised since March 2020 to R15.8 billion, with proceeds supporting the group leverage and liquidity positions, which strengthened during the period. In line with our pan-Africa focus, we accepted a binding offer for 100% of MTN Afghanistan,” MTN said in a statement.
Mupita said the headwinds facing customers and the business looked likely to persist in the second half.
“The business is well positioned to navigate the prevailing market conditions. In South Africa, we are focused on improving the resilience and availability of the network, given the constrained on-grid power situation. Battery and generators solutions will be deployed to restore network availability to the world-class standards our customers have been used to. This resilience plan will be executed within the capital expenditure envelope of the business.
“If we experience the same level of load shedding in H2 as we did in H1 in South Africa, service revenue will come in slightly under guidance, with margins at the lower end of the range communicated to investors. The structurally higher growth opportunities in our markets continue to support the investment case of a compelling Africa growth story that delivers digital and financial inclusion to Africans,” he concluded.
BUSINESS REPORT