THE MTN Group yesterday announced that it had achieved solid financial results for the year ending December 2021, thanks to having “de-leveraged” its balance sheet despite a difficult macro environment as it grew service revenue that was bolstered by MTN SA growth.
For the year ended December, the mobile operator grew its service revenue by 18.3 percent to R171.8 billion, led by a growth of 6.5 percent in MTN SA.
MTN said headline earnings per share had increased by 31.8 percent, to 987 cents per share, while the board declared a final dividend of 300 cents per share.
The group’s earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 23.7 percent to R80.8bn; and the Ebitda margin expanded by 2.2 percentage points to 44.5 percent.
Group president and chief executive Ralph Mupita said: “In a challenging macro-economic environment across our markets, we also experienced what we see as structurally higher demand for data services and accelerating transaction values in our fintech businesses.”
Its fintech section grew by 30.9 percent to R15.9bn, digital increased by 22.8 percent to R3.3bn, enterprise revenue grew by 13.4 percent to R16.6bn, and wholesale increased by 49.7 percent to R6bn.
This as voice grew by 5.2 percent to R82.4bn and data increased by 36.5 percent to R56.5bn.
Net debt was reduced to R30.5bn as at December 31, 2021.
“We de-leveraged the balance sheet, paying $1.4 billion (R21.5bn) in dollar debt and improving the holding company leverage to 1.0x from 2.2x. This was boosted by cash of R18.4bn repatriated from our operating companies and R4.1bn in proceeds from our asset realisation programme during the 2021 financial year,” he said, adding that they anticipated net proceeds of R8.8bn from the public offer of MTN Nigeria shares and the sale of passive tower infrastructure.
Mupita said the group’s strong results were delivered despite the reduction in subscriber additions related to industry-wide regulations in Nigeria, including a ban on new SIM activations in the first half.
“We closed the year with 272.4 million subscribers, up by 2.9 million. Excluding Nigeria, group subscribers increased by 11.0 million. Encouragingly, subscriber additions in Nigeria returned to a positive trajectory in Q4, adding approximately 1 million customers – this establishes a solid basis for growth going forward,” he said.
Active data subscribers increased by 11.1 million to 122 million.
MTN SA delivered stellar results. It reported that subscribers increased by 3 million to 35 million. MTN SA said it added 2.4 million prepaid subscribers to close the year at 27.6 million, supported by an increase in 4G customers. The company had 4.2 million registered MoMo users.
Nomtha Ngumbela, the assistant portfolio manager at Umthombo Wealth, said MTN had delivered a solid set of results, which had been largely anticipated given the earlier earnings releases of Nigeria and Ghana, two geographic segments that again proved instrumental in 2021 for the group.
“The balance sheet continues to strengthen as group and Holdco net debt comes down, and MTN maintains its leverage well below the guided range of 1.5x. What was particularly exciting is the progress being made in the fintech space which grew 30.9 percent to R15.9 billion and now contributes 8.8 percent to group revenue,” she said.
According to Ngumbela, despite continued growth, MTN still had a way to go towards its target of 200 million mobile data users.
“A breakdown of the transaction value for MTN’s MoMo offering reflected that the company has surpassed M-Pesa which is another pleasing result and nods to real opportunity fintech has to drive earnings and investor value in the long run,” Ngumbela said.
“Management declared a dividend of 300cps ahead of the minimum guidance of 260cps, representing a yield of 1.5 percent. This was perhaps the most disappointing takeaway from the results as the company recorded strong earnings and operating free cash flow growth.
“Dividend guidance for FY22 (full year 2022) is lighter than one would expect at 330 cps with no interim dividend guided for at this stage. Though investors have enjoyed superb capital appreciation, especially those who purchased the stock in March of 2020 when it was trading at R40.
"However, not all hope is lost as management did indicate that given a deceleration in capital intensity in the medium to long term, shareholders could look forward to a special dividend," Ngumbela said.
BUSINESS REPORT ONLINE