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MTN posts strong Q3 results, nets R2.3bn from Jumia

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MTN group CEO Ralph Mupita.
MTN group CEO Ralph Mupita.

MTN today reported strong third quarter results, as it continues to contend with the effects of the COVID-19 pandemic.

The Pan-African telecoms group’s stellar results were supported by the strong performance of its larger operations, MTN SA and MTN Nigeria.

The group also completed the exit from its 18.9% investment in Pan-African e-commerce platform Jumia, netting R2.3 billion from the deal.

MTN has the biggest market share in 13 of the 21 countries where it operates mobile networks in Africa and the Middle East.

In the quarter, MTN added 12 million subscribers and 5.3 million active data users. Group CEO Ralph Mupita says the company reached a significant milestone in its goal to enable greater financial inclusion by surpassing the 40 million Mobile Money (MoMo) subscribers mark, an addition of 3.5 million in the quarter.

“In Nigeria, we added over 90 000 agents to end Q3 at 311 770 registered agents for our fintech business. Apart from greater adoption brought on by COVID-19, more people used MoMo because of enhancements to the functionality of the MoMo app, the large increase in registered MoMo agents, as well as the integration of MoMo into our instant messaging platform Ayoba in some of our markets.”

During the period, MTN recorded growth in voice revenue of 3.9%, which Mupita says reflects an encouraging recovery supported by the easing of lockdown restrictions and the gradual reopening of the economies in the group’s markets.

Data revenue grew by 31.9%, bolstered by increased demand for work from home services, digital entertainment as well as online education offerings.

The telco also recorded growth in fintech and digital revenue of 21% and 37.5% respectively, which it says was driven by increased adoption and usage of digital channels and offerings.

Home advantage

In its home market, SA, MTN subscribers increased by 1.9 million in the quarter, to 30.9 million.

It says the majority of the additions were prepaid customers, reaching a total of 24.3 million, marking the largest quarterly increase in nearly 18 months.

MTN’s postpaid subscriber numbers remained broadly flat at 6.6 million, which it says was primarily as a result of churn on short-term COVID-19-related deals.

Excluding the net impact of these deals, the postpaid subscriber base increased 168 100 for the quarter.

In SA, MTN’s robust data traffic growth of 80.6%, coupled with a 0.5 million increase in active data users to 14.7 million, supported a solid 16% increase in overall mobile data revenue.

“In line with the commitment to improve the affordability of data for its customers, MTN SA has reduced its effective data tariff by approximately 34.7% since September 2019,” says Mupita.

“The execution of MTN SA’s prepaid strategy resulted in a solid performance in the consumer prepaid business, which remained on an improving trajectory with service revenue up 3.1%, benefiting from a strong third quarter when service revenue increased by 5.7% year-on year. The business benefited from increased data usage and customer additions, as well as an increased uptake in data packages as it focuses on affordability and customer value management initiatives.”

Nigeria’s upward trajectory

Turning to Nigeria, MTN's biggest market in Africa recovered from elevated volatility caused by COVID-19, to record massive revenue growth from digital and fintech services.

MTN delivered a firm performance, with service revenue growth of 13.8% and an acceleration in third quarter growth to 16.5% year-on-year.

The telco added 3.9 million customers in the quarter, bringing the overall base to 75 million subscribers.

The number of active data subscribers increased by 1.7 million, to close the quarter at 30.7 million. Some 2.9 million new smartphones were connected to the MTN Nigeria network, increasing smartphone penetration to 45.2% of the base – up from 43.5% in the second quarter and 41.7% in the third quarter of 2019.

“This performance was largely driven by continued growth in data and a recovery in voice against a backdrop of ongoing oil price volatility, COVID-19-related pressures and scarcity of foreign exchange,” says Mupita.

Legal headache

Mupita also addressed the matters engulfing its Middle East operations that have been problematic for MTN.

The telco is currently defending itself in a US court following fresh allegations in an amended lawsuit that claims MTN “was a particularly aggressive practitioner of protection payments” to terror group al-Qaida in Afghanistan.

MTN is being accused of violating US anti-terrorism laws.

Mupita says: “MTN believes the amended complaint suffers from the same fundamental defects in the case explained in the April motion. The plaintiffs proceeded to amend their initial complaint, following the June 2020 motion to dismiss. With the complaint having been amended with new allegations, MTN filed another motion to dismiss in September 2020.

“This motion to dismiss takes into account the new allegations made in the amended complaint. MTN remains of the view that the court should dismiss this claim on the grounds of lack of jurisdiction and that the amended complaint still does not allege any conduct by MTN that is in violation of the Anti-Terrorism Act.”

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