Wim leads MTN’s strong march forward as Uganda’s largest telco crosses the UGX 2 tn revenue and UGX3 tn asset marks; shareholders to share in UGX335.6 bn dividend The results are the first since MTN listed on the Uganda Securities Exchange on December 06th 2021. The results are also Wim Vanhellepute's 6th annual results since he was appointed to head MTN in July 2016. During this time, Wim, has grown MTN's revenue by 57% from UGX1.308 trillion in 2016, to UGX2.060 trillion in 2021- a Compounded Annual Growth Rate of 8%. During this time MTN's net profit has grown from UGX96 billion to UGX340 billion, a growth of 254%― a compounded annual growth rate of 23%! MTN has also transformed from a UGX1.509 trillion asset company to well over UGX3.298 trillion! Under Wim’s watch, MTN has also grown from 8.9 million subscribers to well over 15.7 million.

Uganda’s telecommunications giant, MTN Uganda Limited has announced its annual results for the financial year ended 31 December 2021- posting some impressive numbers, considering the tough operating environment, dampened by the pandemic.

In the results released today, the telco that went public last year, shedding off some 12.95% and raising a record UGX535 billion.

In the results released today―MTN’s first full-year results, since it got listed on the exchange, the company reported that total revenue grew by 10% from UGX1.878 trillion in 2020 to UGX2.060 trillion in 2021.

This was on the back of a 9.4% growth in service revenue- from UGX1.866 trillion in 2020 to UGX2.040 trillion in 2021. Service revenue constituted 99% of the overall revenue of the business.

Voice revenue remained the biggest service revenue driver, growing 3.6% from UGX971 billion to UGX1.007 trillion. Data revenue grew by 21.9% from UGX338 billion to UGX412 billion, while fintech revenue that is largely composed of MTN Mobile Money, grew by 10.2% from UGX477 billion to UGX525 billion.

Voice, although it remained the biggest cash cow, had its share to the overall basket reducing- by 2.7%, to 49.3% while data and fintech’s contribution to service revenue increased to 20.2% (+2.1 pp) and 25.7% (+0.2pp) respectively.

The decline in voice contribution, according to a joint commentary by the MTN Board Chairman Charles Mbiire and the CEO Wim Vanhellepute, was anticipated as voice, in Uganda and elsewhere continues to give way to data and fintech. 

“Data revenue growth of 21.9% was underpinned by improvements in broadband coverage and growth in active data users. We undertook an aggressive deployment of 3G and 4G sites with a Year-on-Year (YoY) growth of 23% and 55% in the number of sites respectively. We registered a 16% growth in active data users while total MBs used increased by 47.2% YoY,” the duo said.

“Fintech revenue grew by 10.2% mostly driven by growth in active subscribers on the mobile money services (+16.3%) and basic fintech services. The basic revenues grew by 19.3% YoY while our advanced revenues (revenues from other fintech services) increased by 20% YoY supported by the increased adoption of our customers in using our platforms for bill payments (+58%) and merchant payments (+13%),” the duo further explained. 

All the above revenue growth was buttressed by an overall mobile subscriber base growth of 1.5 million (+10.7% YoY) to 15.7 million from 14.2 million as well as a 16% growth in active data users to 5.3 million from 4.6 million.

The company said it remained the overall market leader as well as the market leader in the voice, data and fintech segments

MTN injects UGX270 billion into building superior network reach and quality

To continue riding the data wave, MTN said that it had, in the year, launched a series of data growth initiatives “targeted at converting incidental users on the base into active users and acquiring new data users through the smartphone growth acceleration program.”

“MTN Uganda introduced a low-cost mobile device financing program in the market to make data access more affordable to customers. Device Financing has enabled our customers to own a smartphone at an initial cost equivalent to a feature phone price. Smartphone access is a key lever in driving digital inclusion and data growth. With more than 100,000 phones financed both internally and through partners, we see an increasing number of customers adopting data usage. This strategy, coupled with our dynamic data value proposition, supported smartphone penetration of 30.8% (+7.4pp) by the end of the year,” Wim Vanehllepute intimated.

In line with MTN’s Ambition 2025 strategy, the telco said it had invested a total of UGX 270.2 billion in projects targeted at “maintaining service quality and aggressively expanding our footprint in line with our data performance improvement strategy.”

“At its core, this strategy (Ambition 2025) sets the context in which MTN Uganda will drive the business forward and capture explosive growth opportunities from digital acceleration trends. It also aims to reveal the inherent value of some of MTN’s businesses and assets, such as financial technology and fibre over the medium-term, for the benefit of MTN’s shareholders,” Wim says.

He also said that MTN had expedited its 4G network rollout by building a total of 664 4G sites in the year which, in turn, increased the 4G coverage to 62.7% (+17.7pp YoY). MTN also said that during 2021, it had been assigned additional spectrum (1,800MHz and 2,100MHz) resources that it leveraged to improve network quality.

“In addition, we embarked on a spectrum efficiency program, to migrate data traffic from 3G to 4G which has greatly improved the data experience with faster throughputs delivered on the 4G network. The 4G contribution to total data traffic stood at 53% (+13pp YoY),” the company reiterated in a statement.

Thanks to these network improvements, MTN said, it had “emerged as the best data and voice network in Uganda having attained the Best Network Performance Score in the year in a countrywide assessment undertaken by Rohde & Schwarz, a leading independent monitoring and network testing firm.”

On the fintech front, MTN said its mobile money active subscribers rose to 9.9 million (+16.3% YoY) from 8.5 million users, underpinned by what MTN said was an “effective subscriber acquisition and an engaging Customer Value Management (CVM) program.

“In the broader ecosystem, we grew our active mobile money agents to 173,400 (+47.8% YoY) through our attractive agent incentive program and trade assistance initiatives. We also increased our merchants by 61% to 52,926,” the company said.

Leaner, efficient and more profitable

The sizeable CAPEX and increasing costs of sales, notwithstanding, the company said it had implemented several cost management and efficiency initiatives on all its cost centres, saving some UGX 42.8 billion in 2021, compared to UGX 11 billion in 2020. 

Thanks to these efficiencies, Profit After Tax (PAT) increased to UGX 340.4 billion (+5.8% YoY) up from UGX322 billion in 2020.

The company however said that profit would have been higher, had it not been for two particularly significant and unusual transactions that are non-recurring in nature.

One of the transactions is the payment by MTN of transitional license fees of UGX 51 billion (US dollar 14.1 million) to the Uganda Communications Commission for the period 20 October 2018, when MTN’s previous second national operator license expired, to 1 July 2020, when the National Telecom Operator (NTO) License was issued. This sum was paid by the company on 9 September 2021.

MTN also paid UGX 11.3 billion (USD3 million) to Invesco Uganda Limited in connection with the termination of the Support Services Agreement that was entered into between the Company and Invesco Uganda Limited on 15th May 2013.

Had it not been for these two transactions, MTN said that net profit would have been UGX 387.3 billion, representing a 20.4% YoY increase in net profit.

MTN said it would pay a combined UGX 335.6 billion, in dividend which translates to a total dividend per share of UGX 14.99.

“In line with the USE Trading Rules 2021, the ex-dividend date will be Thursday, 26 May 2022. Accordingly, an investor who buys MTN Uganda shares before this date will be entitled to the final dividend. Any investor buying MTN Uganda shares after Thursday, 26 May 2022 will not be entitled to the final dividend declared for the year. On Friday, 24 June 2021 the dividend will be transferred electronically to the bank accounts or mobile money wallets of shareholders,” the company said in a statement.  

Towards 90% landmass coverage by 2024 and optimising data opportunities

Coming about future prospects, MTN said it was optimistic about a better macroeconomic environment in 2022 and that the company was “well­ positioned and will continue to invest to benefit from this trend as we continue to drive our objective to lead digital solutions for Uganda’s progress.”

“In line with the recovery of economic fundamentals, we expect low double-digit average growth in service revenue over the medium term. In delivering on the service revenue growth guidance, we will continue to focus on cost and capital expenditure efficiencies and target an EBITDA margin in the 52% to 53% range, operating cash flow growth and improving returns to shareholders. The forecasted dividend pay-out ratio is projected to range between 75% to 80%,” the company emphasized, in a statement.

“Our capital expenditure program will enable us to fulfil our NTO license obligation, which is targeting 90% landmass coverage by 2024. Our initiatives will continue to support 2G voice to 3G voice traffic offloading which will reduce 2G voice congestion and allow us to create a better customer experience,” MTN said.

MTN also said that it would pursue opportunities for data growth in fixed connectivity through MTN Waka Net, fibre to home and fibre to business and said that it would continue to invest in that segment.

“We are currently progressing with the implementation of a new pricing framework for the fixed data connectivity services to widen our customer catchment area. For mobile data, we plan to continue with our device financing initiatives to drive smartphone penetration and maximize on the spectrum efficiencies which will be a key driver of mobile data usage,” MTN says.

“In fintech, our mobile money revenues continue to be impacted by the 0.5% withdrawal tax introduced in July 2018 and increased competition from other fintech platforms. We will focus on growing our advanced services to accelerate revenue growth through attractive propositions in the MoMo-Pay (merchant payments) and MoMo-Advance (overdraft services) products,” MTN added.