How MTN made Shs228bn net profit in first half of 2023

Shareholders could earn Shs5.6 per share in September

Kampala, Uganda | JULIUS BUSINGE | MTN Uganda has reported an 18% jump in profit after tax to Shs228bn in the first six months of 2023 compared to Shs193bn reported in the same period last year.

The company’s Chief Executive Officer Sylivia Mulinge and Chief Finance Officer/Executive Director, Andrew Bugembe released the results at a news conference held in Kampala on Aug.4.

“We are happy with the results,” Mulinge told reporters. “I am happy with the work being done by our team in terms of product and service innovations in line with our customer needs,” she added.

According to the results, service revenue increased by 15.0%, driven by positive growth momentum in voice, data, and fintech segments.

Voice revenue increased by 9.4% to Shs544bn in the first six months of the year compared to Shs497bn in the same period last year. This was underpinned by solid growth in our customer base, executives said.

The telco’s net subscriber additions in the half of 2023 increased by 910,000 customers to 18.1 million as a result of strong gains in customer value management addressing product affordability and competitiveness.

The firm’s net promoter score – a measure of how likely a customer is to recommend their friend to buy MTN services – also improved with notable increments in the company’s network quality performance, product innovation, and brand appreciation.

During this period the company decongested its 2G traffic through the migration of customers to 3G.

Data revenue increased by 22.1% to Shs290bn in the first half of 2023 from Shs237bn in the same period in 2022, with the firm’s active data subscribers growing by 21.4% to 6.9 million.

Positive performance on the data side was partly attributed to the company’s increased focus on driving smartphone adoption through partners.

“Our smartphone penetration in the period improved to 35.7% with 24.1% growth in smartphone users…our MB per user has also grown strongly by 25.0% in this period,” Mulinge said in a statement accompanying the results.

She also reported structurally higher demand for data services from their enterprise business segment as they improved their offering in the small and medium enterprise space.

“These consolidated efforts have increased our data traffic by 53.4% with over two-thirds carried on 4G,” she said.

Meanwhile, home broadband revenue grew by 50.4% during the period under review supporting the company’s aggressive activation strategy which yielded a 65.0% growth in the subscriber base. Bugembe (CFO) said, their customers have continued to embrace the idea of working from home as was the case during the COVID-19 pandemic years of 2020/2021 and thereafter.

Fintech revenue – the money that comes from the users of MTN MOMO Pay and related services – grew by 18.6% to Shs358bn from Shs302bn supported by a steady subscriber base of 10.9 million customers.

The company executives said growth in this segment was driven by advanced revenues with strong growth in their payments and international remittance contributions. Increasing customer adoption to MoMoPay has also supported solid merchant growth which enabled an increase in transaction volumes during the period under review.

In terms of agent numbers, the company registered a slight decline as it continued to execute its agent rationalisation strategy geared towards sustainable growth.

The company’s tax payment to the government increased by 19% from Shs82bn in the first half of 2022 to Shs97bn in the same period of 2023.

The company’s directors proposed the payment of the first interim dividend of Shs5.6 per share for the six months ended June 2023.

The first half performance of 2023 caused an increase in earnings per share by 18% from Shs8.6 in the first half of 2022 to Shs10.2 in the first half of 2023.

Plan for second half

The company is anticipating continued positive growth hinged on Bank of Uganda’s economic growth projections.

Bugembe said, the current monetary policy stance, coupled with decreasing global inflation is expected to maintain inflation levels of around 5% in quarter three of the year which will augment their performance.

He said: “Our focus for the remainder of the year will be on the seamless execution of our Ambition 2025 plans which include driving industry-leading connectivity operations with the new spectrum allocation. We expect improved data speeds, introduction of e-sims and 5G connectivity to address our growing customer needs.”

Richard Yego, the managing director for MTN Mobile Money Uganda Limited said they will accelerate cashless conversion through key partnerships and aggressive mobile money ecosystem to improve fintech space performance.

“We have resumed the rollout of MoMo agents to meet the growing market demand and are modifying our merchant proposition,” he said.

Mulinge said, from a financial perspective, they will continue to ensure disciplined capital allocation in their investments while managing the company’s working capital to preserve its balance sheet and liquidity position.