MTN Uganda Records rapid revenue increase in first quarter of 2022

MTN Uganda Limited has in the first quarter of 2022 ended 31 march, recorded a steady progress despite challenging macro environment following a protracted lockdown due to COVID-19.

Salient features:

•          Mobile subscribers increased by 8.5% to 15.9 million

•          Active data subscribers grew by 20.1% to 5.4 million

•          Active fintech subscribers increased by 14.9% to 9.5 million

•          Service revenue grew by 11.0% to UGX 536.3 billion

•          Data revenue grew by 45.0% to UGX 115.6 billion

•          Fintech revenue grew by 20.7% to UGX 144.8 billion

•          Earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 11.8% to UGX278.2 billion

•          EBITDA margin up by 0.4 percentage points (pp) to 51.6%

•          Capital expenditure (IAS 17) for the period increased by 280% to Ush 114.1 billion

•          Profit After Tax (PAT) increased by 20.1% to UGX 100.5 billion

•          All growth rates are presented on a year-on-year basis (YoY-Q1 2022 versus Q1 2021)

Commenting on the report, MTN Uganda CEO, Wim Vanhelleputte said that the full re-opening of the economy in January has resulted in some uptick in demand and although this has not been as pronounced as expected, an open economy should help ease some of the pressures that have been felt.

“In spite of the tough environment, we maintained our market leadership in Uganda and delivered a solid growth in our overall mobile subscriber base of 8.5%, to 15.9 million. We recorded double-digit service revenue growth of 11.0% driven by strong growth in our data and mobile money segments. Our profitability was underpinned by solid execution of our expense efficiency programme, which enabled EBITDA growth of 11.8% and a 0.4pp improvement in the EBITDA margin to 51.6%.”

Data shows that the company’s service revenue grew by 11.0% driven by strong growth in data and fintech revenue segments. The performance was underpinned by the sustained investment in the network, with capex (IAS 17) of Ush114.1 billion deployed during Q1.

“This is a testament of our commitment to increase the network coverage and expansion of our fibre footprint ultimately improving the customer experience. We have deployed 115 new sites in this period and increased our 4G coverage to 65.1%. Our capex intensity increased by 8.6pp to 21.2 % due to frontloading of our planned investment requirement We expect capex intensity to normalise to a level in the upper teens by year-end.”

Voice revenue declined by 4.7% as a result of immediate impact from the current macro disruptions, based on early trends especially in mass market segment. The promised to employ various Customer Value Management initiatives to improve the voice usage and reduce subscriber churn.

Also, data revenue increased by 45.0% and was underpinned by a 20.1% growth in active data users, improvements in company’s broadband coverage, increase in billed data traffic by 58.6% and increased smart phone penetration by 7.3% over the period.

“Our initiatives to migrate traffic from 3G to 4G have continued to bear fruit with 55% of total data traffic now carried by the 4G network, offering more of our customers a significant improvement in quality of service,” said Wim.

For fintech revenue, it grew by 20.7% supported by a larger base of mobile money active subscribers. The basic revenues grew by 18% while advanced revenues (revenues from other fintech services) increased by 50% supported by two-fold growth in remittances and insurance portfolios.

Report indicates that EBITDA performance was affected by a 9.7% growth in company’s expenses largely attributed to the spike in fuel prices in the quarter affecting utilities spend. The Uganda Energy Fuel and Utilities inflation index recorded an increase of 8.5% by the end of the quarter.

As a result, the company’s PAT increased by 20.1% to UGX100.5 billion, signifying an improvement in profit margins at 18.6% from 17.2% the previous year.

Report also shows that the company’s competitive environment in fintech has tightened up with the National Payments Systems Act in Uganda in 2020, which has led to several new players entering the market.

Wim, however, decried trading conditions which he says have been further affected by rising household inflation and fuel prices, exacerbated by the war in Ukraine, which have had a notable impact on consumer purchasing power.

“We continued to drive digital inclusion and affordability by reducing the price for our lower tier internet bundle packages. We also intensified our smart phone affordability programme with a renewed partnership with M-KOPA under our Pay Mpola Mpala campaign. With these initiatives, smartphone penetration has increased to 31.4% from 24.2% the previous year.”

Following the successful structural separation of MTN Mobile Money Uganda Limited, a 100% duly owned subsidiary of MTN Uganda Limited, a new CEO Richard Yego was appointed in Q1. Wim said that Yego brings a wealth of experience from his background in banking and digital financial services which will be pivotal to the realization of the company’s strategy and vision of driving financial inclusion in Uganda.

He added that his company continued to support its customers through MTN Foundation activities, including ongoing initiatives in health and education services.

“We were honored and humbled to receive a Humanitarian Recognition Award from the Uganda Red Cross society in acknowledgement of our work, I reiterate the commitment of MTN to standing with our people.”

MTN Uganda also partnered with the Federation of Uganda Football Associations to sponsor the Uganda Premier League for two seasons.

Wim said that the company has also undergone a brand refresh to usher in a new look that is aligned to its Ambition 2025 strategic intent of leading digital solutions for Uganda’s progress.

“We will execute on our strategy as we continue to navigate challenging trading conditions and drive growth and efficiencies in the business. This will be underpinned by sustained investment drive our connectivity business and continue to scale our platforms.”

He said they are committed to supporting the government’s goal to increase financial inclusion and achieve a largely cashless economy in Uganda.