MTN Group reported a resilient performance in the first half of 2022, balancing accelerated network investment, lower communication costs, and the delivery of solid financial results.
According to the telco, it advanced the delivery of its strategy despite difficult conditions such as macroeconomic and geopolitical volatility, global supply chain disruptions, constrained on-grid power supply in South Africa, and increased regulatory requirements in 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.”
Network investment increased broadband access to 85.5% of the population and resulted in an average 22.5% reduction in data tariffs. Our contribution to society and economies also included R7.3 billion in cash taxes paid to nation-states during the period.
The contribution we made to jobs and the fiscal resources of nation states was highlighted by good financial results in the first six months of 2022 in driving investment that grows gross capital formation.
In constant currency terms, service revenue increased 14.8% to R92.5 billion; earnings before interest, tax, depreciation, and amortization (EBITDA) increased 15.1% to R43.9 billion before one-time items; and the EBITDA margin increased by 0.3 percentage points to 45.3%. This was aided by the focused execution of our expense reduction program.
“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.”
As part of our Ambition 2025, we 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 US$116.3 billion. The total number of MTN subscribers in the period was 281.6 million, up 5.6%.
It further says it made progress in its work to separate our fintech and fiber businesses from GSM business and has started the process of engagement with select potential strategic investors into the Group Fintech structure, the outcome of which should be concluded by the end of the year.
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 cashflow growth was strong at 24.0%, and return on equity increased to 24.2%, reflecting the consistent delivery of earnings.
MTN accelerated our portfolio transformation, delivering R9.2 billion in asset realizations in the first half and bringing the total realized 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.
Localisations remained important in the period, as they prioritized creating shared value, broadening local participation, and deepening capital markets. In Ghana, it increased local ownership to 23.7% through share sales to pension funds and strategic investors.
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 generator 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.