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MTN accelerates growth, delivers on dividend

11 Mar 2019

MTN Group, the parent company of MTN Rwanda, last week, announced its financial results for the year 2018 which ended December, promising its investors that it was committed to improve its financial performance in the medium term period.

The South African based company said in a statement that it was targeting to achieve a 20 per cent return on equity from the current 11 per cent in the next three to five years.

“Considering the improved performance in 2018 and its growth plans, the group revised its guidance to investors upwards, targeting double-digit growth in service revenue, improved profit margins and capex efficiency and a new target to drive return on equity from 11 per cent to over 20 per cent in the next three to five years,” the company said.

Among other things, MTN plans to grow its data and voice services as well as expand its mobile money services to new markets, including in South Africa, Nigeria, Afghanistan and Sudan to achieve its targets.

Currently, MTN mobile money services are available in 14 countries.

“We see significant opportunity to grow subscribers and voice revenue as we also execute on the large mobile data opportunity,” Rob Shuter, the group’s President and CEO, said in a statement.

“We are also extending our “BRIGHT strategy” to build MTN into a digital operator with a major focus on the fintech, digital, enterprise and wholesale business areas,” he added.

MTN defines its “BRIGHT strategy” as a guiding strategy to build its business. It highlights six areas of focus aimed at supporting improved top-line growth, Earnings before interest, taxes, depreciation, and amortisation margins and cash flow over the medium term.

MTN also highlighted that it plans to put its focus on the launch of own music streaming and instant messaging applications.

The Group’s financials for 2018 indicate positive performance and healthy growth despite having faced several regulatory headwinds in markets like Nigeria.

It increased its subscriber base by 16 million to 233 million customers across 21 markets in Africa and the Middle East. The number of active data users increased by 10 million to 79 million and the active mobile money subscriber base rose to 27 million.

According to the firm, the strong commercial momentum drove a 10.7 per cent constant currency increase in service revenue to about $8.6 billion.

“The service revenue growth rate achieved is ahead of both prior year and our guidance and – more importantly – is above the average rate of inflation in our markets, which means we are delivering real growth in service revenue,” said Shuter.

Group Earnings before interest, taxes, depreciation, and amortisation rose more than 15 per cent.

Meanwhile, the company said it was on course to manage regulatory challenges that it has faced over the years. Last year, the firm was in a heated dispute with Nigeria’s central bank over improper repatriation. The bank ordered MTN to return $8.1billion it had illegally moved out of the country.

The two parties came to conclusion late last year after MTN made a settlement of $52.6 million to end the dispute.
A year before, MTN Rwanda had had quite similar issues when the regulator slapped the telecommunication giant with a fine of $8.5 million for running its IT services outside the country in breach of its license.

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