MTN Group on Wednesday posted a near 18% jump in first quarter revenue, led by double-digit growth in commercial operations across Ghana, South Africa, Nigeria.
In terms of percentage growth in service revenue, Ghana topped with 22.4 per cent growth, followed by Nigeria with 17.2 per cent and the South Africa with 11.8 per cent.
A week ago, MTN Ghana reported a 22.4% growth in service revenue for Q1 2021, attributing it to continued execution of revenue diversification strategy, which saw resilient growth in both data and mobile money as key growth drivers.
The Ghana operations chalked an impressive 40.4 per cent growth in data revenue year on year, driven by a 4.4% increase in active data subscribers and higher number of smartphones on the network and an increase in data traffic. In effect, data revenue contribution to service revenue increased from 26.5% to 30.4% year on year.
Meanwhile, mobile money revenue grew at 48.4% year on year, driven largely by 1.2% growth in active users, higher person to person transactional activity and growth in advanced services such as retail merchant payments, insurance and international remittances. The contribution of mobile money to service revenue increased from 19.4% to 23.5% year on year.
On the contrary, voice revenue grew by only 3.3% year on year over the period supported by a 2.4% growth in subscriber base and the execution of various customer value management initiatives.
MTN Ghana said voice performance was negatively impacted by the implementation of the 30% asymmetric interconnect rate reduction in October 2020, due the activation of regulatory intervention resulting from declaring MTN Ghana significant market power.
“The contribution of voice to service revenue therefore continued to decline from 45.6% to 38.5% year on year,” it said.
Another area of decline was digital revenue, which dipped 16.4 per cent year on year, due to the application of the principal versus agent IFRS 15 accounting standard across the MTN Group in 2020.
“In line with our broader medium term target to improve our margins and prudently manage our costs, we recorded a 24.6% growth in EBITDA with a corresponding margin expansion of 1.2% to 54.6%. The improvement in our margin was achieved through strong top line growth and diligent execution of our expense efficiency initiatives underpinned by continued digital distribution efficiencies,” MTN Ghana said.
Meanwhile, MTN Nigeria also reported a 17.2 per cent increase in total revenue, with an impressive 42.5 per cent increase in profit for the quarter, in spite of losing over five customers due to a new national ID requirement for activating SIM cards.
Again, the Nigerian telecoms market leader saw earnings before interest, tax, depreciation and amortization (EBITDA) climb by 19.1% to ₦204.5-billion, while EBITDA margin also climbed by 0.9 percentage points to 53.1%.
Earning per share rose by 42.5% and profit before tax also up 33.9%.
Again, although active data subscribers fell slightly, MTN Nigeria still recorded an 86.7% increase in data traffic, supported by additional access to the key 800MHz band.
Digital revenue grew by 101% and fintech revenue by 28.5% as customers continued to adopt digital products and services, a trend accelerated by the pandemic.
MTN South Africa (MTN SA) recorded strong performances across the consumer, enterprise and wholesale businesses. Underpinned by market share gains and a subscriber base of 32.1 million, an 11.8% increase in service revenue and good cost containment drove a 3.2 percentage point expansion in MTN SA’s EBITDA margin to 39.8%.
The Group reported that a strong and resilient operational and financial performance over the period, saying that it exceeded its medium-term service revenue targets, and the key drivers were gains in data and fintech revenue.
“The MTN Group has delivered a solid Q1 2021 trading performance, with service revenue and EBITDA margins expanding on the back of continued commercial momentum and resilient networks,” said MTN Group President and Chief Executive Officer Ralph Mupita, adding that the Group’s Ambition 2025 strategy had gained execution traction during challenging COVID-19 macroeconomic conditions in the quarter.
In constant currency terms, service revenue grew by 17.8% to R42.3 billion at end-March 2021, earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 21.3% and the EBITDA margin widened to 44.2% from 42.7%.
“The overall Group results were supported by double-digit service revenue growth from our large operations and continued focus on our expense efficiency programme. We are encouraged in particular by the strong performance of MTN South Africa, as well as accelerating data and fintech services across the group in the period,” he said
Group data revenue grew by almost a third amid sustained demand for work-from-home services, digital entertainment as well as online education offerings. Fintech revenue also accelerated, expanding by more than 31% as the value of fintech transactions increased by 87% to US$53 billion.
“We are pleased with the momentum in driving our platform strategy and the fintech separation project is progressing well, in line with our Ambition 2025 strategy,” said Mupita. “MTN Rwanda recently received a licence to operate a separate fintech entity, bringing the number of structurally separated entities to 12 (out of 16 fintech markets). We continue to progress our work in establishing the Topco structure for fintech, and anticipate that this will be concluded before Q1 2022.”
The Group’s strong overall performance was despite a 1.7 million decrease in subscriber numbers to 277.9 million as MTN Nigeria’s subscribers declined because of restrictions on all new SIM sales and activations in that market. The Group’s active data subscribers increased by 1.3 million to 115.6 million and the number of MoMo customers increased by 0.2 million to 46.6 million. Excluding the impacts of MTN Nigeria, MTN Group total subscribers increased by 3.4 million.
COVID-19 continued to impact lives and livelihoods across the world, including at MTN. By 31 March 2021, the Group had reported 1 557 COVID-19 infections and mourned the loss of 11 MTN employees to the virus across our markets. We continue to prioritise the health and safety of our people.
Alongside equity partners, in April we submitted a bid for one of two telecoms licences to operate in Ethiopia, Africa’s second most-populous country which represents the last and largest telco liberalisation opportunity in the world. MTN’s participation in the bid process aligns with our pan-Africa focus and capital allocation framework.
The Group remains committed to its asset realisation programme (ARP) and is confident of making progress on realising the 29% stake in tower company IHS Group in the short term. This is key to MTN’s ARP. IHS continues to explore an IPO of its shares in line with its public statement made in August 2020.
“Looking ahead, we are focused on executing our Ambition 2025 strategy, driving growth, de-leveraging the Holdco balance sheet and unlocking value, whilst navigating the impacts of the pandemic,” concluded Mupita.