Shares in MTN Group surged 10% yesterday as the markets welcomed the telecom’s group hiking its half-year earnings by 7.1% and as it announced Mastercard had purchased a stake in its fintech business for an undisclosed sum.
The shares traded at intraday high of R142.89, having closed the previous day at R129.50.
In its interim financial results for the six-month period ended June 30, 2023, the pan-African mobile operator said its headline earnings per share increased to 542 cents from 506c in the comparable period.
MTN reported that group service revenue grew by 15.1% to R107.7 billion, driven by revenue from data services increase of 24% and from fintech services of 22%. Revenue from voice services was up 6%, and no interim dividend was declared for the period.
MTN CEO Ralph Mupita said operating conditions remained challenging due to ongoing pressures in the macroeconomic, geopolitical, and regulatory environments across MTN’s markets.
“In South Africa, although there was some respite in the second quarter of 2023 as load shedding abated compared to the first quarter, power outages remained a constraint on our business.
“We experienced 181 days of load shedding in the 2023 first half compared to 68 days in the first half of 2022,” he said.
Mupita said MTN and Mastercard had signed a memorandum of understanding, which provides for a minority investment by Mastercard into group fintech based on a total enterprise valuation of about $5.2 billion (R99bn) for the business on a cash and debt-free basis.
“Signing of the definitive investment agreements is expected to occur in the very near term as we approach finalisation of customary due diligence.
“The closing of the investment will be subject to customary closing conditions. The commercial agreements executed with Mastercard will support the growth and profitability of our fintech business’ advanced services, including payments, remittance, and technology infrastructure development,” he said.
The group said Mastercard would enable MoMo consumers to pay globally and MoMo businesses to digitise their payments and accept payments beyond MoMo users.
“This will enable group fintech customers to participate in the global economy,” it said.
MTN said total subscribers increased by 3.6% to 291.7 million. Voice revenue increased by 6.1% with growth in voice traffic of 19.4% year on year. MTN said performance in MTN SA remained under pressure due to load shedding, particularly in prepaid.
Data revenue rose by 23.6%, and the group said the overall performance was attributable to the 7.4% year on year growth in active data subscribers and a 10.3% increase in data usage. The volume of transactions on MoMo grew by 37% to 8.3 billion.
Looking ahead, Mupita said amid ongoing macroeconomic and geopolitical challenges and regulatory developments, MTN Group’s resilient business model, strong balance sheet, and disciplined strategy execution have positioned the company for accelerated growth and relevance to 2025.
“Although there are encouraging signs of stabilisation in macroeconomic trends in some markets, we anticipate that trading conditions will remain challenging for the remainder of 2023. We will continue to implement our proactive measures to manage the near-term challenges and risks,” he said.
BUSINESS REPORT