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    MTN   ZAE000042164

MTN GROUP LIMITED

(MTN)
  Report
End-of-day quote. End-of-day quote Johannesburg Stock Exchange - 01/27
167.89 ZAR   -2.00%
07:59aMTN : President visits Ghana, meets key stakeholders
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01/24MTN : strategic priority to create shared value leads to material ESG re-rating
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01/11MTN Uganda Launches Momoadvance
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Quarterly trading update for the period ended 30 September 2021

11/04/2021 | 12:22am EST

MTN Group Limited Quarterly update for the period ended 30 September 2021

1

MTN Group Limited

(Incorporated in the Republic of South Africa) (Registration number 1994/009584/06) (Share code MTN)

(ISIN: ZAE000042164)

(MTN Group or MTN or the Group)

Quarterly update for the period ended 30 September 2021

MTN is a pan-African mobile operator with the strategic intent of 'Leading digital solutions for Africa's progress'. We have 272 million customers in 20 markets and are inspired by our belief that everyone deserves the benefits of a modern connected life.

Salient features

  • Group service revenue up by 19.1%
    • Group data revenue up by 34.5%
    • Group fintech revenue up by 35.0%
  • Group earnings before interest, tax, depreciation and amortisation (EBITDA) up by 24.1%
  • Group EBITDA margin improved to 45.0% (from 42.9%)
  • MTN South Africa service revenue up by 7.7%, with an EBITDA margin of 41.6% (from 39.3%)
  • MTN Nigeria service revenue up by 23.5%, with an EBITDA margin of 52.6% (from 51.1%)
  • Subscribers increased by 0.2 million to 271.9 million, impacted by new SIM registration regulations in Nigeria (ex-Nigeria subscribers were up 1.6 million)
  • Active data subscribers increased by 4.1 million to 119.0 million
  • Active MTN Mobile Money (MoMo) customers increased by 2.2million to 51.1 million
  • MoMo value of transactions up by 67.2% YoY to US$175.5 billion

Unless otherwise stated, financial growth rates are presented on a constant currency basis and are year-on-year (YoY, 9M to September 2021 vs 9M to September 2020). Non-financial growth rates are presented as quarter-on-quarter (QoQ, 3Q 21 vs 2Q 21). To enable like-for-like comparability, all growth rates for non-financials have been restated to exclude MTN Syria, which was deconsolidated from 25 February 2021.

Service revenue excludes device and SIM card revenue. Data revenue is mobile and fixed access data and excludes roaming and wholesale. Fintech includes MoMo, insurance, airtime lending and e-commerce. Active data users is a count of all subscribers at a point in time which had a revenue generating event in the specified period of time (90 days) prior to that point in time and also during the past 30 days had data usage greater than or equal to 5 megabytes. MoMo users are 30-day active users.

2 MTN Group Limited Quarterly update for the period ended 30 September 2021

MTN Group Limited

Quarterly update for the period ended 30 September 2021

Group President and CEO Ralph Mupita comments:

"The MTN Group recorded a solid Q3 2021 trading performance, tracking positively against our medium- term targets with double-digit service revenue growth and the expansion of EBITDA margins. This was delivered through solid commercial momentum and the ongoing execution of our Ambition 2025 strategy in challenging COVID-19 macroeconomic and trading conditions. Material progress was made in executing on our asset realisation programme (ARP), ensuring the faster deleveraging of the Group holding company (Holdco) balance sheet. The structural separations of the fintech and fibre assets remain on track.

The Group has weathered a third wave of COVID-19 infections across our footprint. While the economies in many of our markets have started to open up, we remain conscious of the ongoing impacts and challenges that the pandemic presents. The sustained investment in our networks and platforms, our disciplined capital allocation and strong market leadership has enabled us to continue supporting the societies in which we operate. We remain well-positioned to drive faster digitalisation and capture growth opportunities in our markets.

We continue to support our stakeholders through our Yello Hope and other initiatives, with our ongoing COVID-19 response focused on four main areas: social; commercial; network and supply chain; and funding and liquidity.

By 28 October 2021, we had recorded 3 432 COVID-19 infections and mourned the loss of 30 of our staff. The health and safety of our people remains a clear priority. The rollout of vaccines across our markets improved. By 28 October 2021, 1 612 (7.3%) of our staff had received at least one dose. We continue to support vaccine rollouts across Africa as a rapid increase in the rate of vaccination is essential for a return to normality both socially and economically.

MTN Group's service revenue grew by 19.1% and EBITDA increased by 24.1%, with the EBITDA margin expanding by 2.1pp to 45.0%, maintaining strong operating leverage supported by our expense efficiency programme. The results were underpinned by strong operational execution and commercial momentum, which helped to drive service revenue growth ahead of medium-term targets at our large operations.

The Group delivered a solid operational and financial performance despite slower subscriber additions. In the quarter we added 0.2 million subscribers to reach 271.9 million, adversely impacted by the decline in subscribers in MTN Nigeria, which resulted from the revised registration regulations in Nigeria. Excluding Nigeria, total subscribers were up by 1.6 million. As more of MTN's enrolment centres in Nigeria are certified for SIM registration in line with the current regulations, we expect positive net additions to resume during Q4 2021.

Focused on driving our industry-leading connectivity business, we sustained voice revenue growth of 6.9%. Data revenue grew by 34.5%. It was supported by robust growth in data usage, up 52.6%, and a 4.1 million addition to active data users in the quarter to reach 119.0 million, as demand for work-from-home services, digital entertainment as well as online education remained robust.

In driving our platform strategy, MoMo active monthly users grew by 22.3% YoY and the average volume of transactions processed through our fintech platform was up 29.6% in Q3 YoY to 19 416 per minute. The value of transactions increased by 67.2% YoY to US$175.5 billion. As we establish and scale our payment platform, the number of active merchants accepting MoMo payments increased by 58.3% YoY to 626 033 and the total value of MoMo merchant payments rose by 46.5% YoY to US$8.1 billion. In Nigeria, we added over 234 000 agents to end the quarter with over 630 000 registered MoMo agents. Fintech revenue rose by 35.0% YoY.

The total value of remittances grew by 68.0% YoY to US$1.6 billion in Q3; in addition, we facilitated a total loan value of US$802.2 million, a 48.7% increase YoY. At the end of Q3, our InsurTech platform had 14.8 million registered insurance policies, reflecting growth of 51.7% YoY.

MTN Group Limited Quarterly update for the period ended 30 September 2021

3

MTN Group Limited

Quarterly update for the period ended 30 September 2021

We have made further progress in deleveraging our balance sheet faster. Group leverage was comfortably within covenant limits, having remained flat at 0.6x. Holdco leverage remained within our medium-term target, coming in at 1.2x, from 1.4x at 30 June 2021. Our progress in this regard has been recognised by S&P Global Ratings, which upgraded our Group standalone credit rating to investment grade on 22 October 2021. This is an especially pleasing development, being the Group's first investment grade rating from S&P since 2016.

We sustained our investment in our networks to build 'second-to-none' technology platforms, deploying R18.1 billion of capex by Q3 2021.

Our ARP continued to advance. On 14 October 2021, IHS Towers listed on the New York Stock Exchange (NYSE) at a listing price of US$21/share. The initial public offer (IPO) did not have a secondary sale and the listing provides a liquidity platform to support our ARP over the medium-term. MTN Group's shareholding post the IPO and primary capital raise is now 25.8%.

In terms of further ARP progress, MTN South Africa (MTN SA) is well-advanced with a passive tower infrastructure transaction, securing an "Opco-friendly" sale and lease back deal, subject to regulatory approvals.

We announced the intention to float MTN Uganda shares on the Ugandan Securities Exchange (USE) - and opened its IPO - in October 2021; aimed at giving Ugandans the opportunity to participate in the growth and success of MTN Uganda. Over and above the ARP, this forms part of our important work to create shared value in promoting increased local ownership across our markets.

Today we announce our intention to proceed with a public offer for sale of up to 575 million shares in MTN Nigeria, by way of a bookbuild to institutional investors and fixed price to retail investors. The offer is anticipated to open in November 2021 with a bookbuild to institutional investors, after which a fixed price is expected to be announced for retail investors also in November 2021. The offer is expected to close in December 2021. This is the first step in our previously communicated statement of intent to sell down approximately 14% of MTN Group's current shareholding in MTN Nigeria.

We are pleased with the strides that we have made in placing ESG at the core of everything that we do. As MTN Group, we are humbled to be included by Fortune magazine in its 2021 'Change the World' list, in recognition of the positive impact on society through activities that are part of our core business strategy. MTN Group was also ranked among the 'World's Best Employers 2021' - second among telcos globally - in an independent survey spearheaded by Forbes. We are committed to changing the world through meaningful contributions, not only to the communities across our markets, but to our staff as well.

Our MSCI ESG rating was also upgraded during the period to 'A', from a rating of 'BBB' since 2017. This was in recognition of the strides made in our governance practices, where our rating exceeds the industry average and is in the highest scoring range relative to global peers.

Aligned with our commitment to achieve net-zero by 2040, MTN - through Business Ambition for 1.5°C - has joined more than 2 000 businesses and institutions working with the Science Based Targets initiative (SBTi) to reduce emissions in line with climate science and helping to halve global emissions by 2030.

Looking ahead, we are focused on executing our Ambition 2025 strategy, driving growth, deleveraging the Holdco balance sheet and unlocking value, while we navigate the impacts of the pandemic. Our capex guidance for 2021 is R31.1 billion, with increases in spending driven by accelerated rollout in MTN SA and MTN Nigeria to capture growth opportunities from explosive data traffic that we are experiencing. We are committed to investing in the capacity and resilience of our networks as well as scale our platforms to drive accelerated growth. We are guided by our capital allocation framework and look forward to delivering improved returns to shareholders."

4 MTN Group Limited Quarterly update for the period ended 30 September 2021

MTN Group Limited

Quarterly update for the period ended 30 September 2021

The Group's results are presented in line with the Group's operational structure. This is South Africa, Nigeria, the Southern and East Africa (SEA) region, the West and Central Africa (WECA) region and the Middle East and North Africa (MENA) region and their respective underlying operations.

The SEA region includes Uganda, Zambia, Rwanda, South Sudan, Botswana (joint venture-equity accounted), eSwatini (joint venture- equity accounted) and Business Group. The WECA region includes Ghana, Cameroon, Ivory Coast, Benin, Congo-Brazzaville, Liberia, Guinea Conakry and Guinea Bissau. The MENA region includes Iran (joint venture-equity accounted), Syria (in prior financial numbers, deconsolidated from 25 February 2021), Sudan, Yemen, and Afghanistan.

In line with MTN Group's strategy that was announced in March 2021, MTN Ghana results have been reported under the WECA region effective 1 January 2021 (previously included in SEAGHA region). Prior year numbers have been restated for SEA and WECA accordingly.

MTN Syria results have been disclosed up to 25 February for 2021 and up to 31 December 2020, as a result of loss of control effective February 2021, following MTN Syria being placed under judicial guardianship.

COVID-19 pandemic impact on the business

Following a surge in infections earlier in the year, we are encouraged that the number of new COVID-19 cases across Africa has started to slow down. Vaccinations are underway, with around 6.9% of Africans having received at least one jab according to the Africa Centres for Disease Control and Prevention (Africa CDC). We are encouraged by the progress in vaccine rollouts which should assist in the recovery and acceleration of economic growth in our markets.

We continue to manage the COVID-19 effects through four focus areas, namely: social (our people, communities and stakeholders); commercial (including our customers); network and supply chain; and funding and liquidity.

Social

We continue to prioritise the wellbeing of our people through work-from-home measures as well as strict protocols for those who are unable to work remotely. As of 28 October 2021, we had reported 3 432 COVID-19 infections and mourned the loss of 30 MTN employees across our markets. At our South African headquarters, we established a vaccination centre in collaboration with a large hospital group, where local staff and their families could get their COVID-19 jab.

As more vaccines become available and vaccination rates begin to increase across our markets, we expect that government lockdown restrictions will continue to ease. In preparation for this shift, we are pursuing a hybrid working policy, with a mix of on-site and work-from-home solutions, for staff.

We remain dedicated to safeguarding the wellbeing of our staff, customers and communities through initiatives such as the MTN Global Staff Emergency Fund and various Y'ello Hope packages.

MTN Group Limited Quarterly update for the period ended 30 September 2021

5

MTN Group Limited

Quarterly update for the period ended 30 September 2021

Commercial

Our key commercial metrics remained resilient in Q3 as we lapped the base effects from 2020. Overall Group data traffic (including Iran) increased by 52.6% YoY, supported by large increases in MTN SA (up 57.2% YoY), MTN Nigeria (up 85.5 YoY) and MTN Ghana (up 52.2% YoY).

Group fintech transaction volumes in Q3 rose by 40.8% YoY and the value of fintech transactions in US dollar terms was 67.2% higher. In some of our markets, MTN has continued to support customers and drive increased adoption through the zero-rating of transaction fees for some services.

Network and supply chain

Safeguarding our network capacity and ensuring its resilience has been one of our ongoing priorities. To facilitate increased demand, as of 30 September 2021, we had added 2 578 3G, 6 906 4G and 409 5G sites. In the quarter, the headroom on our core data networks, at peak utilisation, was approximately 24% in South Africa, 30% in Nigeria and 44% in Ghana. Upgrades are underway in these three markets, as well as others, ensuring that we are able to meet consumer and business demand.

Funding and liquidity

We continue to strengthen our balance sheet with a clear focus on actively managing liquidity and debt maturities. We are committed to accelerating the deleveraging of the Holdco balance sheet and optimising our debt mix, through solid operational performance and cashflow generation, cash upstreaming, asset realisations and liability management.

As at 30 September 2021, Group net debt was R38.4 billion. Our net debt-to-EBITDA ratio was 0.6x, well within our covenant of 2.5x. Our interest cover was 7.3x, comparing favourably with the covenant limit of no less than 5.0x.

We sustained a healthy liquidity position at Holdco level at the end of September 2021, with Holdco net debt of R33.9 billion (30 June 2021: R36.7 billion) and Holdco leverage at 1.2x (vs 1.4x on 30 June 2021). We are pleased that Holdco leverage continues to track well against our medium-term target of 1.5x. The acceleration in the deleveraging of the Holdco balance sheet has been underpinned by significant progress in cash upstreaming. During Q3, we upstreamed R4.6 billion from our operating companies (Opcos) - including R2.3 billion from Nigeria - bringing the year-to-date total to R13.9 billion. After the end of Q3, we received some further dividend flows from Nigeria.

We maintained our prudent approach to managing liquidity. On 30 September 2021, our Holdco liquidity headroom stood at R53.9 billion - comprising R21.8 billion in cash (excluding the restricted cash in Nigeria) and R32.1 billion in committed, undrawn credit facilities.

Our medium-term focus is to deleverage faster and to improve the funding mix at the Holdco level through reducing our exposure to US dollar debt. Post the Q3 period-end, we announced an early redemption of the US$500 million principal amount of 5.373% Guaranteed Notes due in February 2022. All the outstanding 2022 Notes were redeemed on 1 November 2021 for approximately US$512.7 million (including interest of US$5.8 million); supporting our ambition to deleverage faster.

We remain focused on improving liquidity and optimising our funding mix. The September 2021 ratio of non-rand to rand-denominated debt at the Holdco level stood at 47:53. On a pro forma basis, accounting the abovementioned early redemption of 2022 notes, the mix would shift to 39:61. This is in line with our medium- term target of 40:60.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

MTN Group Ltd. published this content on 04 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2021 05:21:05 UTC.


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