MTN in better than expected performance
JOHANNESBURG - Mobile operator MTN yesterday said that it remained committed to delivering on its medium-term targets after a better than expected performance in the six months to June.
Chief executive Rob Shuter said the group would focus on double-digit growth in service revenue in constant currency terms in Nigeria and single digits in its home market of South Africa.
Shuter said group service revenue increased to R80.2billion from R67.9bn a year earlier on 12.4percent growth in MTN Nigeria and 19.4percent in MTN Ghana.
He said the group was, however, impacted by the reduced wholesale business from Cell C and Telkom in South Africa.
MTN SA service revenue declined 2.5percent as a result of the lost national roaming revenues arising from the discontinuation of the roaming agreement with Telkom and effects of the continued accounting for Cell C revenue on a cash basis.
“We recognised R788million in revenue from Cell C in the six months to June 30, 2020, and R673m of Cell C revenues remained unrecognised in June 2020,” said Shuter.
In May MTN SA commenced phase two of a national roaming agreement with Cell C over a three-year transitional period.
The agreement would have seen MTN carrying all of Cell C’s network traffic.
The financially distressed Cell C shifted from a build and buy strategy with high capital expenditure to a roaming model as part of improving its liquidity position.
MTN SA said its enterprise division continued its growth trajectory and reported a 15.1percent increase in service revenue while data revenue rose 16.7percent, supported by a 77percent surge in traffic and an increase of 14.1percent in active data subscribers to 14.2million.
Shuter said no interim dividend was paid, given the significant uncertainties in the operating environment brought about by Covid-19.
“Should conditions warrant a final dividend, this would be no more than R3.90 per share, aligned to the current dividend policy,” said Shuter.
Other group highlights included a resilient balance sheet despite the challenging environment that was supported by strong operating free cash flows, which increased by 117.8percent.
MTN added 10.6million subscribers to reach a total base of 261.5million and reached a significant milestone in surpassing the 100million mark of active data users. The group recorded 38.3million Mobile Money users and in Nigeria added 114000 agents to reach 222000 registered agents.
Old Mutual Investment Group analyst Ian Woodley said that the results were above consensus expectations.
“The cut of dividend which was signalled before the results was a little upsetting,” Woodley said. “MTN had signalled that it would grow its dividend by 10 to 20 percent a year, so it’s abandoning that promise. However, in the face of the Covid-19 disruptions I suppose that’s a reasonable action to take.”
Woodley said the outlook was clouded by Covid-19 and how long would remain an issue.
He said telecoms companies had, however, weathered the storm better than many other sectors for obvious reasons. “The main worry in the short term would be a massive upheaval in currencies in the countries it works in and the impact that has on its operations and balance sheet,” said Woodley.
MTN shares declined 1.40percent on the JSE yesterday to close at R59.29.