African operations push MTN to profitability

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MTN Group’s full-year results for the year ended 31 December 2019 show its African operations are anchoring the telco’s bumper profit.

The group’s stellar results were supported by double-digit growth in service revenue by both MTN Nigeria and MTN Ghana.

The Pan-African carrier’s service revenue went up 9.8% in constant-currency terms, led by 22.9% growth in MTN Ghana and 12.6% growth in MTN Nigeria. In SA, revenue grew by 0.4%.

MTN’s operating profit rose to R31.29 billion, and after-tax profit surged 11.6% to R10.69 billion. However, the telco says subscribers in SA fell to 28.9 million from 31.2 million previously.

In a note to shareholders this morning, the mobile operator said its performance in SA was impacted by economic pressure, as well as the new data regulations.

Commenting on the results, MTN’s outgoing group CEO Rob Shuter says: “In 2019, the 25th anniversary of MTN Group, we delivered commercial momentum across our operations, as well as great progress in our strategy and strong financial results, despite challenging trading conditions.

“We added 18 million customers to reach a total of 251 million and increased our data users by 17 million to 95 million and our fintech customers by seven million to 35 million. This growth is central to our belief that everyone deserves the benefits of a modern connected life. We also saw improvements in customer experience, network quality and market share across the group.”

On the strategic front, Shuter says MTN launched instant messaging platform Ayoba, which is now live in 12 markets, with two million monthly active users.

Furthermore, Shuter says: “We launched MoMo [Mobile Money] in South Africa and Afghanistan, and received our super-agent licence in Nigeria, registering more than 100 000 agents by year-end. We also delivered R14 billion of asset realisations within the first 12 months of our programme and MTN Nigeria listed on the Nigeria Stock Exchange.

“We recorded progress on various regulatory issues, including the AGF tax matter in Nigeria. Relationships with stakeholders across our markets improved, and we reported our highest employee sustainable engagement score yet.”

Looking ahead, Shuter says MTN is building growth strategy on its digital operator model while optimising efficiencies, capex and cashflow.

Shuter explains that following data price reductions in South Africa and Nigeria in 2019, MTN expects price elasticity to improve data revenue growth in 2020, supported by expanded 4G coverage in Nigeria and across the group.

“We will continue to scale up our fintech and digital services, as well as grow our enterprise and wholesale businesses,” he says.

According to Shuter, MTN has maintained its service revenue, EBITDA margin, capex intensity and return on equity targets, and increased its asset disposal target by a further R25 billion over the medium-term.

Meanwhile, MTN announced group president and CEO, Shuter, will vacate his office next March.

MTN says: “The board thanks Rob for the contribution he has made, and continues to make, to MTN. The succession process will be concluded during the year, enabling a seamless handover.”

The leading telco company in Africa also announced other management changes, including that of MTN group chief technology and IT officer Charles Molapisi, who has been appointed to the group executive committee, and the fixed contract of group chief operations officer Jens Schulte-Bockum has been extended until 31 March 2022.

MTN appointed Shuter as its new group president and CEO in 2016 but he only took the role in 2017.

At the time, Shuter was CEO of the European cluster at the Vodafone Group. Shuter has extensive experience in telecoms and banking, as he held senior management roles at Vodacom, Standard Bank and Nedbank prior to joining Vodafone.

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