Africa’s largest mobile-operator MTN says robust demand for its data and fintech services helped core profit rise by double digits in its half-year to end-June, but it is looking to increase prices in certain markets to fund the continued expansion of its network.
Increased smartphone penetration and an improving network helped data revenue grow more than a third in MTN’s half-year, with the group reporting core profit of R43.87bn, up 15.1% in constant current terms, before one-off items.
Margins also improved, despite a 22.5% fall in effective data pricing, even as capital investment jumped 47.6% to R17.1bn.
“Subject to regulatory approvals, we are also looking to implement moderate price increases in certain markets,” the group said. “Some level of price increment will be needed to ensure the long-term sustainability of the business, including to support the level of capital investment required to maintain the capacity and quality of our networks.”
MTN, whose shares are up almost 150% on a two-year basis, has been benefiting from rapidly rising demand for digital services, given a boost by Covid-19, while it has also been spending heavily on its network infrastructure.
Group service revenue grew 14.8% to R92.5bn in constant-currency terms, growing almost a fifth in Nigeria and almost 30% in Ghana, while SA registered a more sedate 4.1%.
The operator said it took a hit in SA from load-shedding, with stage 6 blackouts in June prompting its average network availability to fall to 89% in that month, while it generally targets above 99%.
Despite this, the group said it has now reached 20% 5G coverage in SA by population, ahead of its December target, while core profit in this market edged up 0.2% to R9.8bn.
Group subscribers rose 5.6% to 281.6-million, despite sim registration regulations in Nigeria, which restricted outgoing voice services for 19-million subscribers.
“During the first half of 2022, we delivered a solid performance underchallenging global and regional macroeconomic and geopolitical conditions,” CEO Ralph Mupita said in the results.
“Rising energy and food prices, general inflation and interest-rate conditions [have] put pressures on disposable incomes, [and] operating and capital expenditure,” he said.
MTN has bumped up its capital-expenditure guidance for 2022 to R35.3bn from R34.4bn previously, reflecting an increase in Nigeria, as well as currency assumptions for its second half.
Fintech revenue rose 14% to R8.2bn, with the volume of transactions processed growing 31.5% to six-billion, increasing 11.7% in constant-currency terms to $116.3bn (R1.88-trillion).
MTN didn’t declare an interim dividend, from none previously, which is in line with its policy. The group expects to pay a final dividend of 330c per share for its full year, which would represent a 10% increase. MTN had paid about R5.65bn for its final dividend in 2021.
MTN’s shares were up 8.99% to R158 on Thursday, having fallen 11.83% so far in 2022, but still up almost a third on a one-year basis. So far in 2022, takeover target Telkom has fallen 14.2% while Vodacom has gained almost 2%.
Update: August 11 2022
This article has been updated with additional information.
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