MTN to pay dividends despite poor show of stock market and global inflation

Kampala, Uganda | THE INDEPENDENT | MTN Uganda shareholders are due to get their first dividends since the company listed on the Uganda Securities Exchange, with the register for those eligible closing June1.

The shareholders will have their dividends paid on June 24, with each share earning the holder 4.706 shillings, according to Enid Edroma, the company secretary.

Investors who bought shares in the Initial Public Offer (just before the company’s shares were floated on the Uganda Securities Exchange in December last year) were allowed to buy a minimum of 500 shares at 200 shillings each, and got a 10 percent share bonus.

The minimum share-holder held 550 shares, and these will therefore be paid a total of 2,588.3 shillings.

The announcement comes amidst poor performance of the issued shares which continued to lose value since the listing. From the IPO price of 200 shillings in December 2021, MTN began the year with a share price of 194.99 shillings but has since lost 2.57% off that price valuation, ranking it sixth on the USE in terms of year-to-date performance.

The current share price on the USE 191 shillings, a 0.01 percent rise from the closing price of Tuesday, gives hope that the announcement of the dividend will boost its strength.

MTN Uganda is the fourth most traded stock on the Uganda Securities Exchange over the past three months (Feb 21 – May 31, 2022), with a total volume of 12.5 million shares valued at 2.29 billion shillings over the period, according to data from the USE.

The ability to pay the dividends arises from the good performance of the company’s business, having retuned a profit of 100.5 billion shillings in the period January-March 2022, compared to 83.6 billion for the same quarter in 2021.

The growth in profits was boosted by a growth in revenues due to a better performance of the internet segment.

“Data revenue increased by 45% and was underpinned by a 20.1% growth in active data users, improvements in our broad band coverage, increase in our billed data traffic by 58.6% and increased smart phone penetration by 7.3% over the period,” says a statement from MTN.

The other segment that grew was the Fintech, whose revenues grew by 20 percent mainly because of an increase in the Mobile Money subscriber base.

The company says it was also hit by the increase in fuel prices which saw its expenses grow almost 10 percent in the three months, compared to the first quarter of 2021.

This situation is adding to the uncertainties most sectors of the economy are facing about the short and medium term business environment, with many reporting a more challenging environment.

“Higher inflation for essential commodities and fuel has been exacerbated by the war in Ukraine which is also putting pressure on supply chains. These factors will continue to impact on consumer spend as well as input costs for the business,” says the Chief Executive Officer, Wim Vanhelleputte.

Yet, the company has to increase its capital expenditure in line with the National Operator’s License mandate.

The focus, according to Vanhelleputte is on expanding their 4G network especially to the densely populated areas.

MTN also says there is increased competition in the financial technology (fintech) segment since the operationalization of the National Payments Systems Act, 2020 last year.

The company’s number of mobile money subscribers grew 14 percent to 9.5 million between the first quarter of 2021 and the first quarter 2022, while total MTN subscribers grew to 15.9 million.

The data segment witnessed the highest growth of 20 percent to 5.4 million active users.

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