MTN posts strong Q1 results, looks to sell towers in SA
Boosted by its South African operations, growth in data as well as fintech services, mobile operator MTN Group has reported stellar results during the first quarter of the year.
This morning, the mobile operator announced a strong and resilient operational and financial performance in the first quarter of 2021, with growth in service revenue exceeding medium-term guidance, driven by gains in data and fintech revenue.
In a statement announcing the results to shareholders, MTN also said it is looking to conclude the sale of its tower infrastructure in SA during the third quarter of 2021.
“The MTN Group has delivered a solid Q1 2021 trading performance, with service revenue and EBITDA [earnings before interest, tax, depreciation and amortisation] margins expanding on the back of continued commercial momentum and resilient networks,” says MTN Group president and chief executive officer Ralph Mupita.
He adds that the group’s Ambition 2025 strategy gained execution traction during challenging COVID-19 macro-economic conditions in the quarter.
In constant currency terms, MTN’s service revenue grew by 17.8% to R42.3 billion at end-March 2021, EBITDA rose by 21.3% and the EBITDA margin widened to 44.2% from 42.7%.
“The overall group results were supported by double-digit service revenue growth from our large operations and continued focus on our expense efficiency programme. We are encouraged in particular by the strong performance of MTN South Africa, as well as accelerating data and fintech services across the group in the period,” Mupita says.
Solid SA operation
The company notes MTN SA recorded strong performance across the consumer, enterprise and wholesale businesses.
It notes that underpinned by market share gains and a subscriber base of 32.1 million, an 11.8% increase in service revenue and good cost containment drove a 3.2 percentage point expansion in MTN SA’s EBITDA margin to 39.8%.
MTN Nigeria and MTN Ghana – both of which reported Q1 results in the past week – continued to build on their solid operational execution and commercial momentum, says the firm.
Group data revenue grew by almost a third amid sustained demand for work-from-home services, digital entertainment as well as online education offerings.
Fintech revenue also accelerated, expanding by more than 31% as the value of fintech transactions increased by 87% to $53 billion.
“We are pleased with the momentum in driving our platform strategy and the fintech separation project is progressing well, in line with our Ambition 2025 strategy,” says Mupita.
“MTN Rwanda recently received a licence to operate a separate fintech entity, bringing the number of structurally separated entities to 12 (out of 16 fintech markets).”
However, MTN says the group’s strong overall performance was despite a 1.7 million decrease in subscriber numbers to 277.9 million, as MTN Nigeria’s subscribers declined because of restrictions on all new SIM sales and activations in that market.
In this context, it says, the group’s active data subscribers declined by 1.3 million to 115.6 million, while the number of Mobile Money (MoMo) customers increased by 0.2 million to 46.6 million.
Excluding the impact of MTN Nigeria, MTN Group total subscribers and active data subscribers increased by 3.4 million and 1.3 million, respectively.
On 19 April 2021, the suspension on issuing new SIMs and various other activities were lifted subject to adherence with the Nigerian regulator’s stipulated guidelines, says MTN.
It points out that in driving its platform strategy, MoMo active monthly users grew by 32.9% year-over-year (YOY), while the average volume of transactions processed through the company’s fintech platform was up 46.7% YOY, to 16 567 per minute, and the value of transactions increased by 86.6% to $53.2 billion.
“As we establish our payment platform, the number of active merchants accepting MoMo payments doubled YOY to 521 000 while the total value of MoMo merchant payment (gross merchandise value – GMV) rose by approximately 299.2% to $4.8 billion,” Mupita notes.
“In Nigeria, we added 54 000 agents to end the quarter with 449 146 registered MoMo agents. The total value of remittance grew by 160.5% to US$552 million in Q1; in addition, we facilitated a total loan value of $231.5 million, a 27.7% YOY increase. At the end of Q1, our insurtech platform counted 12.6 million registered insurance policies, reflecting growth of 66.7%.”
Voice, data surge
The operator also recorded voice and data revenue growth of 7% and 32.7%, respectively, amid sustained demand for work-from-home services, digital entertainment as well as online education offerings.
Mupita adds: “In the streams leading our push into platforms, we delivered growth in fintech and digital revenue of 31.1% and 32.3%, respectively, supported by increased adoption and usage of our digital channels and offerings.”
The company notes MTN SA continues its work in exploring a potential sale and leaseback of its passive tower infrastructure.
Having issued invitations to offer expressions of interest in this regard, MTN SA has received over 20 responses and has engaged financial advisors to assist with the process.
“We anticipate that this process will be concluded by the end of Q3 2021,” says Mupita.