Africa’s largest telecom firm loses subscribers, earnings decline

Africa’s largest wireless carrier MTN Group announced its interim results for the first half of 2021, and posted a decline in earnings per share and subscribers, despite the telco claiming “solid” performance in terms of revenue growth.

MTN announced a 10 percent decline in reported headline earning per share (HEPS) — the main profit measure in South Africa — in the six months ended June, falling to 387 cents per share, down from 430 cents in the same period in 2020.

The company’s executives said the decline in HEPS was due to “many non-operational” and “one-off items” which refer to the impairment losses suffered in the Yemen operation and the company exiting Syria by abandonment.

While announcing the results on August 12, Ralph Mupita, MTN Group chief executive officer said that in the first six months of 2021, there was strong service revenue growth in the telco’s largest operations in South Africa, Nigeria and Ghana.

Nigeria and Ghana delivered double-digit percentage increases in service revenue, while all MTN South Africa business units recorded good growth.

“Notwithstanding the many challenges presented by the Covid-19 pandemic, MTN delivered a solid first half, exceeding most of the Group’s medium-term targets through sustained commercial momentum as well as executing on our Ambition 2025 strategy,” Mr Mupita said.

Overall, service revenue grew by 2.1 percent to 19.7 percent, translating into 81.9 billion rand ($5.55 billion), on the back of strong growth of 25.5 percent in Ghana, 23.8 percent in Nigeria and 9.3 percent in South Africa.

However, the Group suffered a 2.3 million decline in the number of subscribers, ending the period under review at 277.3 million, due to new industry-wide Sim registration regulations in Nigeria — MTN’s largest market with 37 million customers.

New regulation

Because of the new regulations, new Sim cards added to its tally in Nigeria remained muted, but the Group’s subscribers elsewhere in the 21 markets grew by 5.4 million.

The biggest drivers of revenues are the fintech and data segments, both registering big percentage increases in the first six months of this year. According to the results, fintech rose by 39.7 percent, with the number of active users on the MTN payment system platform MoMo increasing by 2.6 million to 48.9 million compared with December last year, generating a monthly average revenue per user of $1.3. The value of MoMo transactions was up by 88.3 percent to $115.2 billion, with 17,292 transactions processed per minute.

Data also continues to drive the Group’s revenues, expanding by 32.2 percent on the back of a 56 percent increase in data usage to 0.9GB per user per month; the period under review saw 3.1 million new data users, bringing the total number to 117.4 million.

Voice revenue grew by 8.9 percent, supported by growth in voice traffic of 12.3 percent year-on-year, while other review sources are digital, enterprise and wholesale services packages.

The performance of MTN Uganda was hindered by the implementation of some service restriction orders in January, when the government shut down Internet gateways and blocked social media platforms Facebook, Twitter and YouTube ahead of the general election. The shutdown negatively affected data and fintech service segments, but overall the Ugandan subsidiary delivered an increase by 10 percent in service revenue, according to the results.

Mr Mupita said that MTN will immediately exit Syria due to regulatory and licence demands that have made it intolerable to operate — a reversal of the company’s position announced last year that the telco would leave the market in the medium term.