MTN Group, one of the leading telecommunications companies in Africa, has reported an impressive 11.2% increase in earnings for the first half of 2023, despite facing various challenges in its markets. The company attributed its strong performance to its focus on customer experience, network quality, digital services and fintech solutions.
In a statement, MTN Group President and CEO Ralph Mupita said: “We are pleased with the resilience and agility of our business, which delivered solid results in a difficult operating environment. We continue to execute on our strategic priorities of accelerating growth, deleveraging the holding company and unlocking value.”
According to the company’s financial results, MTN Group’s service revenue grew by 16.8% year-on-year, driven by double-digit growth in voice, data and fintech revenue. The company also added 28.6 million subscribers to reach a total of 303.1 million across its 21 markets. MTN Group’s earnings before interest, tax, depreciation and amortization (EBITDA) margin expanded by 1.4 percentage points to 43.5%, while its headline earnings per share (HEPS) increased by 11.2% to 430 cents.
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MTN Group faced several challenges in the first half of 2023, including regulatory uncertainties, currency volatility, social unrest and the impact of the COVID-19 pandemic. The company said it invested R10.6 billion in capital expenditure to enhance its network capacity and coverage, as well as to support its digital and fintech platforms. The company also increased its social investments to support the communities it serves, especially in response to the health and economic crisis caused by the pandemic.
How did the pandemic affect MTN Group’s operation?
The COVID-19 pandemic has been a major challenge for many businesses around the world, but especially for those operating in emerging markets. The pandemic affected MTN Group’s operation in three key areas: network performance, customer service and financial performance. We will also highlight some of the measures that the company took to mitigate the negative effects and seize the opportunities that emerged from the crisis.
Network performance
As a provider of essential services, MTN Group had to ensure that its network remained resilient and reliable during the pandemic, despite the increased demand for data and voice services from its customers. The company invested heavily in network capacity and quality, as well as in backup power solutions and alternative energy sources, to cope with the surge in traffic and the frequent power outages that affected some of its markets.
The company also leveraged its partnerships with other operators and technology providers to enhance its network coverage and performance. For example, it collaborated with Google to launch Google Station, a service that offers free Wi-Fi access in public places, in Nigeria, Ghana and Uganda. It also partnered with Ericsson to deploy 5G technology in South Africa, becoming the first operator to launch 5G services in the country.
Customer service
The pandemic also forced MTN Group to adapt its customer service channels and offerings to meet the changing needs and preferences of its customers. The company accelerated its digital transformation by expanding its self-service platforms, such as MyMTN app, USSD codes and chatbots, to enable customers to access various services without visiting physical stores or calling customer care agents.
The company also introduced new products and services that catered to the specific needs of its customers during the pandemic. For example, it launched Ayoba, a messaging app that allows users to communicate with each other and access news, entertainment and educational content. It also launched MTN MoMoPay, a mobile money service that enables customers to pay for goods and services using their phones.
Financial performance
Despite the operational challenges and market uncertainties caused by the pandemic, MTN Group delivered a solid financial performance in 2020. The company reported a 9.7% increase in revenue, driven by strong growth in data and fintech services. It also increased its earnings before interest, tax, depreciation and amortization (EBITDA) margin by 1.4 percentage points to 42.7%, reflecting its cost optimization efforts and operational efficiency.
The company also maintained a healthy balance sheet and cash flow position, enabling it to invest in its network infrastructure, pay dividends to its shareholders and support various social initiatives. The company contributed over R250 million (about $17 million) to various COVID-19 relief efforts across its markets, including providing free data, voice minutes and SMS bundles to frontline workers, health authorities and vulnerable communities.
Looking ahead, MTN Group said it remains confident in its medium-term targets and expects to deliver service revenue growth in the low to mid-teens range, EBITDA margin expansion of 50 to 100 basis points and return on equity improvement of 10 to 20 basis points per annum. The company also said it will continue to pursue its asset realization programme, which aims to unlock value from its infrastructure and fintech assets, as well as to reduce its debt levels.