Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Business of Tech

Uncertain times see MTN suspend dividend

Article Image
Pan-African operator MTN's Group service revenue grew by almost 20% in 2020, but it has decided to suspend its final dividend for the year, blaming uncertainties around cash repatriation from Nigeria, the timing of proceeds from its asset realization program (ARP) and COVID-19 impacts.

Group service revenue for the year ended December 31, 2020 grew 11.9% in constant currency terms, to R170 billion (US$11 billion). This was led by growth of 14.6% for MTN Nigeria, 1.6% for MTN SA, 16.6% for MTN Ghana and 9.5% for MTN Uganda.

"It's important to note that we had a very strong second half of the year and that momentum from the second half, at the service revenue level, has broadly carried through into the first two months of 2021 for in particular our two largest markets of Nigeria and South Africa," said Group President and CEO Ralph Mupita on a conference call with journalists on Wednesday.

Reported headline earnings per share (HEPS), which is regarded as a profit measure for South African companies, were 749 South African cents (49 US cents) for the year, a 60% increase on the previous year.

"In light of material uncertainties, the board has also suspended the dividend policy and anticipates communicating a revised medium-term dividend policy when we announce our 2021 results in March 2022," said Mupita.

During this transition, the board anticipates paying a total ordinary dividend of at least 260 South African cents per share (17 US cents per share) for the 2021 financial year.

"On assessment of the progress of cash upstreaming from Nigeria, ARP delivery and COVID-19 impacts, the board will consider returning further cash to shareholders in the form of special dividends or share repurchases after the release of 2021 results," Mupita added.

The group did not declare an interim dividend either, giving similar reasons.

Mupita said that in the near term the company was focused on de-leveraging the holding company and it reduced net debt by R12 billion ($788 million), to R43 billion ($2.8 billion).

"Our up-streaming from MTN Nigeria remained challenging, and we only managed to repatriate about R286 million ($18.8 million) equivalent from Nigeria. As of the end of December 2020, there were still the equivalent of about R4.2 billion ($276 million) that is yet to be up-streamed from Nigeria."

Asset sales

MTN plans to divest R25 billion ($1.6 billion) in assets over the next three to five years.

The asset realization program has so far brought in R4.3 billion ($282 million), including the sales of a stake in e-commerce business Jumia for about $142 million last October and $121 million for a stake in carrier business Belgacom International Carrier Services SA (BICS) last month .

The telco said it remains focused on completing some planned larger transactions, which did not proceed in 2020 due to "challenging market conditions".

"The needle moving transactions of [tower business] IHS and a further public offer in MTN Nigeria did not proceed in the year, given challenging market conditions. But these will remain critical going forward in transforming our balance sheet and improving the return profile of the group," Mupita explained.

The group also plans to sell its 75% stake in MTN Syria to the minority shareholder Teleinvest for $65 million as it continues with its "orderly exit" out of the Middle East , announced back in August 2020.

Last week MTN said that it would fight a court ruling in Syria that has put its business there under judicial guardianship.

Subscribers soar

The Group added 28.8 million subscribers in the year, to reach a total of almost 280 million across 21 markets in Africa and the Middle East.

Data usage also boomed during a year when the world was forced to stay home due to the COVID-19 pandemic.

"The data traffic that we experienced as a function of COVID-19 lockdowns and social distancing was actually up 110% across all our markets, and we saw data revenue, on a reported basis, up 31%" Mupita said.

At the end of December 2020, MTN had 114.3 million active data users, having added 19 million in the year. It also added almost 12 million mobile money users, to reach 46 million.

The group said its networks remained well-invested, with capex of R28.6 billion ($1.88 billion) in 2020 and plans to invest R29.1 billion ($1.91 billion) in its network, fintech and digital services platforms in 2021.

2025 strategy

MTN also announced its new "Ambition 2025" strategy which it said came from a comprehensive strategy review in the last quarter of 2020.

"As part of this strategic repositioning, we are looking to structurally separate our infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses, over the medium term," Mupita said.

"We currently have a fiber network of over 85,000km, and this network will need to grow given the data demand that we see in the future. We are exploring the setup of a fiber-co, where we can have third party investors in the business. We will need incremental capital over the next years of over $500 million to expand our fiber network into the leading open access fiber network in Africa," the CEO told journalists.

"We also have a significant data center estate and we are exploring how we can work with partners to monetize or crystallized value from this infrastructure asset. "Within fintech, we have a scaled business already and we are looking to structurally separate this business from the core GSM business as that business scales and more than doubles, its current base over the next five years," he added.

He also said the group was looking into selling and leasing back some of its South African towers.

*Top image is of MTN Group President and CEO Ralph Mupita. (Source: MTN).

— Paula Gilbert, Editor, Connecting Africa

Innovation hub

Story

Twitter announces first African office in Ghana, begins hiring

Twitter has announced it is planning to open an office in Accra, the Ghanaian capital – the first in Africa for the social media giant.

Story

Hot startup of the month: Nigeria's OnePipe

This month's hot startup is Nigeria's OnePipe, which is aggregating APIs from banks and fintechs into a standardized gateway that is easy to integrate and makes partnerships seamless.

More Innovation hub

Industry announcements

More Industry announcements

AfricaCom perspectives

Story

Digital inclusion as a catalyst for economic empowerment: Mastercard's Imelda Ngunzu

Mastercard's Imelda Ngunzu talks to Connecting Africa about how digital payment solutions and mobile money are transforming the lives of small business owners, women and marginalized groups in East Africa.

Story

Accelerating women in STEM: In conversation with GirlCode's Tinyiko Simbine

GirlCode co-founder and CFO Tinyiko Simbine talks about why it's important to help girls and young women excel in science, technology, engineering and mathematics (STEM) fields.

Story

How Poa Internet is unlocking meaningful connectivity in East Africa

Poa Internet's CEO Andy Halsall shares his views on what it takes to develop last-mile connectivity and get Africans online in a meaningful way.

More AfricaCom perspectives

Flash poll

All polls

Latest video

More videos

Upcoming events

East Africa Com
May 11-12, 2021
Virtual Event
Africa Tech Festival
November 8-12, 2021
Cape Town, South Africa
More Upcoming events

Sponsored video

More videos

Partner perspectives

How mobile operators in Africa can address signalling threats and secure the network
By Katia Gonzalez, Head of Fraud and Security at BICS

SD-WAN and satellite – how MNOs and telcos can enjoy the best of both worlds
By Ofer Asif, SVP BizDev, marketing and strategy at Spacecom

Africa's mobile operators need better roaming monetization for growth
By Damion Rose, product manager for Mobile Signaling and Roaming Solutions at BICS

All Partner Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up