In the first half of 2022, MTN Group reported a strong performance that balanced an accelerated investment in its networks, lowering the cost of communication, and the delivery of strong financial results.
Under difficult circumstances, including as macroeconomic and geopolitical volatility, global supply chain interruptions, limited on-grid power supplies in South Africa, and increased regulatory requirements across several markets, we advanced the fulfillment of our strategy.
“Notwithstanding the tough macro conditions, MTN remained focused on investing in our markets to increase broadband coverage and to reduce the cost to communicate,” said President and CEO Ralph Mupita. “We accelerated network investment to R17.1 billion and spent an additional R7 billion on securing 4G and 5G spectrum in the key markets of South Africa and Nigeria.”
85.5% more people now have access to internet services thanks to the network investment, which has reduced data rates by an average of 22.5%.
Cash taxes of R7.3 billion that we paid to nation states throughout the time period were another way that we contributed to society and economies.
The contribution we provided to jobs and the fiscal resources of nation states by promoting investment that increases gross capital formation was highlighted by strong financial results in the first half of 2022.
When measured in constant currency, service revenue increased by 14.8% to R92.5 billion, EBITDA increased by 15.1% to R43.9 billion before one-time items, and the EBITDA margin increased by 0.3 percentage points to 45.3%.
This was supported by the focused execution of our expense efficiency programme.
“Growth in data revenue was particularly strong, up 35.9%, driven by MTN Nigeria, MTN Ghana, MTN Cameroon and MTN South Africa,” said Mupita, adding that fintech revenue grew by 14.0%, with solid performances from Nigeria, Uganda and Ghana.
“The introduction of fintech taxes in some markets slowed revenue growth in Q2, 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.”
On top of a highly robust connectivity network, we are developing five scale platform businesses as part of our Ambition 2025.
The most developed of them is the fintech platform, which in the first half of 2018 had 60.7 million Mobile Money users (up 24% from the previous year), resulting in six billion transactions totaling US$116.3 billion.
281.6 million people were MTN subscribers overall during that time, an increase of 5.6%.
We made headway in our efforts to separate our fintech and fiber companies from our GSM business. Additionally, we have begun the process of engaging with a small number of possible strategic investors into the Group Fintech structure.
Chief Financial Officer Tsholo Molefe said the Group accelerated the deleveraging of the balance sheet in the six months to end-June 2022, boosted by the repatriation of R9.4 billion in cash from operating companies, including R4.5 billion from Nigeria:
“We continue to explore opportunities for further liability management and remain focused on reducing the hard currency liabilities on our balance sheet.”
Underlying operating free cashflow growth was strong at 24.0%, and return on equity increased to 24.2%, reflecting the consistent delivery of earnings.
We accelerated our portfolio transformation, delivering R9.2 billion in asset
realisations in the first half and bringing the total realised since March 2020 to R15.8 billion, with proceeds supporting the group leverage and liquidity positions, which strengthened during the period. In line with our pan-Africa focus, we accepted a binding offer for 100% of MTN Afghanistan.
Localisations remained important in the period, as we prioritised creating shared value, broadening local participation and deepening capital markets. In Ghana we increased local ownership to 23.7% through share sales to pension funds and strategic investors.
Mupita said the headwinds facing customers and the business looked 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. Battery and generators solutions will be deployed to restore network availability to the world-class standards our customers have been used to. This resilience plan will be executed within the capital expenditure envelope of the business.“If we experience the same level of loadshedding in H2 as we did in H1 in Sout
h Africa, service revenue will come in slightly under guidance, with margins at the lower end of the range communicated to investors. The structurally higher growth opportunities in our markets continue to support the investment case of a compelling Africa growth story that delivers digital and financial inclusion to Africans,” he added.