JSE-listed telecommunications giant MTN has delivered double-digit growth during the first six months of 2022.
In the six months ended June 30, the group’s earnings before taxes, depreciation and amortisation (Ebitda) before one-off items expanded 13.7%, while the Ebitda margin increased 0.5 percentage points to 45.3%.
In constant-currency terms, Ebitda increased by 15.1% to R43.9-billion before one-off items and the Ebitda margin expanded by 0.3 percentage points to 45.3%.
Basic earnings per share increased 200.7% to 445c, while reported headline earnings per share (HEPS) increased 46.5% to 567c, with nonoperational impacts decreasing HEPS by 94c.
“During the first half of 2022, we delivered a resilient performance under challenging global and regional macroeconomic and geopolitical conditions. Rising energy, food, general inflation and interest rate conditions have put pressures on disposable incomes, operating and capital expenditure (capex),” says MTN Group president and CEO Ralph Mupita.
“The conflict in Ukraine and China’s ‘zero-Covid’ policy have impacted supply chains and to mitigate risk, we accelerated capital expenditure in some of our key markets, such as Nigeria and Ghana.”
Further, in South Africa, power supply constraints from loadshedding affected network availability in the six months under review.
Despite this, MTN achieved an expansion of Ebidta margins, strong underlying operating free cashflow growth of 24% and return on equity, which improved by 4.6 percentage points to 24.2%, as well as double-digit service revenue growth.
“The group accelerated the deleveraging of the balance sheet in the six months to end June, boosted by the repatriation of R9.4-billion in cash from operating companies, including R4.5-billion from Nigeria,” says MTN Group CFO Tsholo Molefe.
Holding company (Holdco) net debt decreased from R30.1-billion to R28.4-billion, with leverage improving to 0.8x during the first half of 2022 from 1.0x in December 2021.
“We made good progress on the faster deleveraging of our balance sheet, with the consolidated net debt-to-Ebitda ratio remaining stable at 0.4x and the Holdco leverage strengthening to 0.8x,” he says.
The group also accelerated its portfolio transformation, delivering R9.2-billion in asset realisations in the first half of the year under review and bringing the total realised since March 2020 to R15.8-billion.
During the six months to June, group service revenue increased 12.8%, supported by an increase of 33.1% – 35.9% in constant currency – of group data revenue and a 9.9% – 14% in constant currency – hike in group fintech revenue.
“In constant-currency terms, service revenue grew by 14.8% to R92.5-billion. This was supported by the focused execution of our expense efficiency programme,” Mupita says, noting that the strong 35.9% growth in data revenue was driven by MTN Nigeria, MTN Ghana, MTN Cameroon and MTN South Africa.
During the half-year under review, fintech revenue grew 14%, with strong performances from Nigeria, Uganda and Ghana.
“The introduction of fintech taxes in some markets slowed revenue growth in the second quarter, 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.”
During the first half of 2022, MTN Group subscribers increased 5.5% year-on-year to 281.6-million.
Active Mobile Money (MoMo) customers increased 24% year-on-year to 60.7-million, with the volume of transactions up 31.5% to six-billion and the value of transactions up 1% year-on-year – 11.7% in constant currency terms – to $116.3-billion.
As the group delivers a resilient first half, MTN Group accelerated its investment into broadband coverage.
“MTN remained focused on investing in our markets to increase broadband coverage and to reduce the cost to communicate,” says Mupita, highlighting that MTN accelerated its network investment to R17.1-billion and spent an additional R7-billion on securing fourth-generation and fifth-generation spectrum in the key markets of South Africa and Nigeria.
Capex for the half-year reached R28.3-billion.
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.
Meanwhile, Mupita warns that the headwinds facing customers and the business are 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,” he says, noting the deployment of battery and generator solutions to restore network availability.
“If we experience the same level of load-shedding in the second half [of 2022] as we did in first half in South Africa, service revenue will come in slightly under guidance, with margins at the lower end of the range communicated to investors.”
The group maintained its medium-term guidance, including the achievement of at least mid-teens group service revenue growth, with Holdco leverage maintained below 1.5x.
MTN did not declare a dividend for the six months to June.
