Accra, Ghana//- Scancom PLC, the parent company of MTN Ghana has posted impressive financial results in its first half year (H1) 2023 despite economic headwinds faced by the Ghanaian economy.
Updating shareholders on the company’s performance for the first six months of 2023 at an event dubbed-‘MTN Ghana Investor Connect’, the CEO of MTN Ghana, Selorm Adadevoh attributed the phenomenal performance to strong growth in voice, data, and Mobile Money (MoMo) revenue.
“MTN Ghana executed on its commercial plans for the half-year and delivered growth in voice, data, and MoMo, supporting a 32.3% year-on-year (YoY) growth in service revenue”.
He said as a result the telecoms giant revised its medium-term guidance upwards, expecting high-20s percentage growth in service revenue.
This performance according to Mr Adadevoh was underpinned by the expansion in the company’s network capacity and coverage, improvements in IT systems and service delivery which supports usage from the 27.3 million subscribers across the country.
Enhancements to the network and IT systems were made possible through an investment of GHS2.2 billion in capital expenditure (capex).
“We grew our 4G coverage to 99.3% of the population, and rolled out 156 2G, 159 3G and 156 4G sites in H1 2023.
Capex growth of 97.4% YoY was driven by acquisition of spectrum licences, accelerated infrastructure deployment as well as an increase in IFRS16 lease costs which was driven by inflation-induced escalations on tower lease agreements”.
Mr Adadevoh was quick to add that core capex excluding spectrum licences and Right-Of-Use (ROU) was GHS1.1 billion with a corresponding intensity of 24.7% for the period.
Voice revenue increased by 13.9% YoY to GHS1.8 billion, supported by customer value management initiatives which drove usage.
For the first six months which ended June 30, 2023, the number of subscribers declined due to disconnections related to SIM registration directives.
Voice revenue contribution to service revenue declined from 33.8% to 29.1% in line with the company’s revenue diversification strategy, he explained.
Furthermore, Data revenue grew by 41.0% YoY to GHS2.6 billion, underpinned by an increase in the number of active users (+7.6% YoY), a 31.8% YoY growth in MB per active user per month and the consequent increase in data traffic (+41.9% YoY).
First quarter price revisions helped preserve data revenue growth, in the face of elevated inflation and an increase in value added tax from 12.5% to 15.0%.
The contribution of data revenue to service revenue increased, in line with our strategy, from 39.0% to 41.5% YoY.
MoMo revenue increased by 48.8% YoY to GHS1.3 billion. This according to the CEO was supported by growth in cash-out revenue (+75.3% YoY) and advanced services revenue (+58.8% YoY). Peer-to-peer (P2P) revenue declined by 4.8% YoY.
The contribution of MoMo revenue to service revenue increased from 19.3% to 21.7% YoY. However, Mr Adadevoh was optimistic that MoMo revenue could overtake data revenue in no-distant future.
Digital revenue declined by 22.1% YoY to GHS63.6 million as MTN Ghana continued to execute on its portfolio rationalization initiatives.
In his words: “We expect this process, which is aimed at ensuring that customers get more value and enhanced digital services, to be completed during 2023. We expect this to drive a return to positive growth in digital revenues in 2024”.
Active subscribers increased by 11.6% YoY boosted by a 45.7% YoY growth in Ayoba subscribers for the period. We will continue to improve our music and gaming offerings to boost customer usage and experience”.
The contribution of digital to service revenue decreased from 1.8% to 1.0% YoY.
Throwing more light on the figures, the Chief Finance Officer (CFO) of MTN Ghana, Madam Antoinette Kwofie, indicated that EBITDA increased by 29.4% YoY to GHS3.5 billion, with the EBITDA margin being 1.3 percentage point lower at 56.1%.
She explained that the total costs for the period grew by 36.5% YoY mainly due to inflation, which remained elevated in H1 2023.
“Managing costs remains a priority and we continue to pursue our expense efficiency programme to mitigate the impact of the macroeconomic dynamics on the business”, Madam Kwofie assured.
She expressed worry that increased depreciation charges remained a feature due to investments in property, plant, and equipment as well as inflationary increases on tower lease fees, which impacted the value of RoU assets being depreciated.
Finance income grew by 53.1% YoY to GHS129 million from gains on investments in fixed short-term securities, whereas finance costs increased by 46.8% YoY to GHS364 million driven by high interest rates and growth in interest expense from leases (IFRS 16).
This resulted in net finance costs increasing by 43.6% YoY to GHS236 million for H1 2023, Madam Kwofie said.
MTN Ghana which was declared Significant Market Power (SMP) in 2020 posted a record profit after tax (PAT) for H1 2023 grew by 27.9% to GHS1.7 billion.
So, the board of the company has declared a gross interim dividend of 5.0 pesewas (GHS0.05) per share for the period ended 30 June 2023 as compared to 4.0 pesewas (GHS0.04) in H1 2022.
This is subject to the deduction of the appropriate taxes. The number of ordinary shares in issue at the date of this declaration is 13,236,175,050.
Localisation
In the first quarter (Q1) 2023, MTN Ghana achieved 25.0% localisation of Scancom PLC. After that, a number of shareholders, including MTN Group, opted for Scrip dividends totaling 945.7 million shares and this resulted in a reduction of the Q1 2023 reported localisation position, from 25.0% to 23.2% as at H1 2023.
“Increasing local ownership of Scancom PLC and MobileMoney Limited remains a priority for MTN Ghana and MTN Group. We will continue to work with the relevant regulators and stakeholders to achieve the localisation targets”, Mr Adadevoh and Madam Kwofie emphasised.
Outlook
The executives of the company worried: “High inflation continues to impact our macroeconomic and trading environment, a situation we expect will continue through the second half of the year (H2) 2023.
Upward inflationary pressures in H2 2023 will be amplified by ongoing geopolitical developments, utility tariff increases and IMF reforms such as subsidy removals”.
These factors are expected to push up inflation in Ghana’s economy. In this context, MTN Ghana will continue to leverage its expense efficiency initiatives and explore cost-mitigation efforts to minimize the adverse impact of the macroeconomic challenges on the business, they assured.
“We will execute on commercial initiatives for the year and continue to invest to develop platforms and improve our network and services in line with our Ambition 2025 objectives.
We will sustain the progress on new and existing social projects through the MTN Ghana Foundation as part of our efforts to support the Government’s developmental agenda and improve the lives of Ghanaians”.
Going into H2 2023, they do take cognisance of the possible dampening effect on Ghana’s economy from upward inflationary pressures, risks from Ghana’s debt sustainability and currency volatility.
However, based on the effective execution of their business strategy, MTN Ghana has revised its medium-term guidance upwards from low-twenties to high-twenties (in percentage terms) growth in service revenue.
Since its listing on the Ghana Stock Exchange (GSE) in 2018, the company remains the organisation with the largest number of Ghanaian shareholders.