MTN Nigeria delivered a strong first-half performance to June 30, with sustained commercial momentum, improved profitability and robust cash generation
Image: supplied
MTN Group's share price fell hard on the JSE on Friday even though it said its biggest subsidiary, in Nigeria, delivered a strong performance in the six months to June 30, and after its business in Ghana said it is facing legal action in a dispute about mobile money intellectual property rights.
MTN's share price fell by the most on the JSE on Friday, after trading 9.4% lower at R208.30 late in the afternoon. A year before, the share price was trading at R155.26.
“We delivered a strong first-half performance, with sustained commercial momentum, improved profitability and robust cash generation. This reflects the resilience of demand for our services, disciplined execution across the business and continued focus on efficiency in a challenging operating environment," said MTN Nigeria CEO Karl Toriola in the interim results.
Meanwhile, on July 28, Ghana technology company Clydestone Ghana announced it had filed a lawsuit at the High Court in Accra against MTN Ghana, MTN Group and MobileMoney Fintech. MTN Group on Friday denied claims made by the Ghanaian technology company, insisting the allegations are without merit and will be vigorously contested.
The legal issues related to Clydestone's alleged role in the launch of mobile money services in Ghana almost two decades ago, and about an alleged breach of intellectual property rights on the mobile money services.
MTN Ghana said its operations would be unaffected by the proceedings, and neither it nor the group had raised any provisions, contingent or otherwise, for the dispute.
Total subscribers increased 8.9% to 92.2 million. Active data users were up 9.3% to 55.7 million. Service revenue increased by 25.9% to N3.0 trillion. Earnings before interest, tax and depreciation increased by 39.2% to N1.7 trillion. Earnings per share was up a strong 70.6% to N33.7. An interim dividend of N26 was declared. Free cash flow increased by 73.9% to N712.7 billion.
Toriola said that while the macroeconomic backdrop remained complex, with elevated geopolitical tensions continuing to influence global energy markets and inflationary trends, encouragingly, the naira was stronger and relatively more stable during the period. This supported better planning visibility and helped moderate some cost pressures.
"Commercial momentum remained strong, with 4.9 million net additions in the first half lifting our subscriber base to 92.2 million, while active data users increased by 2.5 million to 55.7 million. This reflects stronger customer engagement, sustained demand for data-rich services and continued smartphone adoption," he said.
Service revenue growth was ahead of medium-term guidance of at least low-20% growth and 10.4 percentage points above the average inflation rate in the first half.
Growth moderated in the second quarter, primarily reflecting the full annualisation of prior price adjustments and, to a lesser extent, the temporary suspension of the airtime and data credit service, which impacted fintech revenue during the quarter.
Service revenue growth excluding airtime and data credit service was 27.3%.
"Despite energy cost-related pressures, we continued to invest in our network while containing operating expenses growth at 11.3%. We invested N620.5bn in capex to strengthen our network and support growth opportunities," said Toriola..
Revenue performance across the business segments reflected strong underlying demand, disciplined commercial execution and continued customer adoption of data and digital services.
Data revenue increased by 38.4%, supported by growth in active data users, higher smartphone penetration and sustained demand for high-speed connectivity. With smartphone penetration at 66.4%, data remains the largest structural growth opportunity.
The home broadband was being scaled in a disciplined manner, focusing on improving conversion and enhancing customer value while demonstrating attractive unit economics over time.
Fintech revenue declined by 7.2%, impacted by the temporary suspension of airtime and data credit service, a significant contributor in the segment. However, the underlying mobile money business saw revenue rising by about 132% and active wallets increasing by 1.3 million to 5 million.
BUSINESS REPORT