MTN adds 29m customers but suspends full-year dividend

MTN Group has reported a strong set of results for the 2020 financial year, adding 29 million customers, growing adjusted headline earnings per share by 52% and more than doubling operating cash flow to R28.3-billion.

The group also reported a four-percentage point increase in return on equity to 17%.

Despite the good numbers, MTN suspended its full-year dividend due to its “near-term focus on faster deleveraging of its holding company as well as three conditions which negatively impacted this objective”.

The three conditions related to uncertainties around “cash upstreaming” (repatriation) from Nigeria, the timing of proceeds from the asset realisation programme, and Covid-19 impacts,” the group said.

“In light of these material uncertainties, the board has also suspended the dividend policy and anticipates communicating a revised medium-term dividend policy when we announce our 2021 results in March 2022.”

During this transition, the board anticipates paying a total ordinary dividend of at least R2.60/share for the 2021 financial year. The board will consider returning further cash to shareholders in the form of special dividends or share repurchases after the release of 2021 results.

“We had very strong second half of the year,” CEO Ralph Mupita said in a call with journalists on Wednesday.

Ambition 2025

MTN has announced a new strategy, called Ambition 2025, to “accelerate growth and unlock the value of its infrastructure assets and platforms”. The results are the first annual results presented by Mupita in the CEO role. Mupita was previously group chief financial officer and replaced Rob Shuter in the hot seat last year. Shuter has taken a senior role at the UK’s BT Group.

“We continued to perform favourably against our medium-term targets,” Mupita said in a statement. In constant currency terms, service revenue grew by 11.9% to R170-billion, and earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 13.4%. Group Ebitda margin improved by 0.9 percentage points to 42.7%.

The strong results were supported by “pleasing growth” in the group’s larger operations and a “broad-based improvement” across all regions, MTN said.

In 2020, the group added 19 million data users and almost 12 million MoMo (mobile money) users, to reach totals of over 114 million and 46 million respectively. Capital expenditure was R28.6-billion.

Net debt was reduced by R12-billion, to R43-billion.

Under the Ambition 2025 strategy, Mupita said the group is “looking to structurally separate our infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses, over the medium term”.

“We believe that Ambition 2025 will position the business to capture the exciting opportunities across our markets and our medium-term guidance has been enhanced to reflect this accelerating growth outlook. To support this, we plan to invest approximately R29.1-billion in our network, fintech and digital services platforms in 2021.”  — © 2021 NewsCentral Media

Duncan McLeod is Editor of TechCentral on which this article was first published here.