MTN Group Ltd – Taking Africa by Storm

MTN Group Limited

MTN Group Ltd (MTN) (JSE: MTN) is a South African mobile telecommunications company operating in many African and Asian countries. They offer digital, consumer, and business services and data and voice services to retail customers.

MTN recorded 273.44 million subscribers as of September 2020, making them the largest mobile network operator in Africa and the ninth-largest globally. They are active in over 20 countries, with one-third of their revenue from Nigeria, holding 25% of the market share.

MTN Group is a sponsor of the English football club Manchester United FC and the main sponsor of the South African national rugby union team.

About MTN

Formerly known as M-Cell, MTN was founded in 1994 with help from the South African government. Their headquarters are in Johannesburg, Gauteng.

The MTN Group agreed to purchase Verizon Business South Africa in June 2008. Verizon provided data services to customers in South Africa, including four other African countries. On February 28, 2009, the acquisition was completed.

On June 26, 2009, the MTN Group and Belgacom International Carrier Services (BICS) subsidiaries merged. The subsidiary merger served as the international gateway for carrier services of MTN.

In October 2012, MTN and Afrihost partnered to provide DSL Broadband services in Africa. Later in the year, a minority stake in MTN Group’s Nigeria business was acquired by South African holding company Shanduka Group for $335 million.

MTN Group Limited

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MTNs Strategy – Ambition 2025

MTN believes that everyone deserves a modern connected life. They aim to lead digital solutions through Ambition 2025.

Ambition 2025 is focused on Africa to build the most valuable and biggest platform business. MTN wants to create solutions to deal with opportunities and confront any challenges that the African continent faces.

MTN has played a massive role in accelerating Africa’s development for more than a quarter-century.

Part of Ambition 25 includes five platform businesses that will service Africa’s increased demand for digital services for financial, entertainment, and commercial.

Departure from the Middle East

In August 2020, MTN decided to sell its shares in Yemen, Afghanistan, and Syria. They want to sell their 49% minority holding in Irancell over the next three to five years and instead focus on their pan-African strategy.

MTN’s decision came from the fact that their Middle East assets contributed to less than 4% of their group earnings in the first half of the year.The Sale of Stake in Jumia

On October 30, 2020, MTN announced the $142 million sales of their shares in Jumia, an e-commerce brand.

MTN Ghana IPO

MTN Ghana opened its initial public offering (IPO) on May 29, 2018. On July 31, 2019, the IPO closed. Qualifying applicants had access to 35% of its equity, which was over 4 million ordinary shares. The sale of shares as part of an agreement in November 2015 between Ghana’s National Communications Authority (NCA) and MTN Ghana. MTN Ghana was to install 4G LTA mobile services to Ghana customers.

Part of the share option was other payment methods, such as MTN mobile money being a payment option for the MTN share offer subscription. It was the first time an IPO had mobile money as a payment method.

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Fintech Separation

MTN has made progress in separating their fintech business and dispose of South African towers to slim down. The plan to develop the fintech unit should get finalized by the end of March 2022.

To pay down debt, MTN has been selling assets to realize value from its pan-African businesses. While exiting the Middle East, they are also planning to sell their stake in HIS Holding Ltd, a pan-African operator of telecom masts.

An 87% year-on-year increase in transactions has been recorded by MTNs fintech business alongside their first-quarter results, with transactions valued at $53 billion. Previously, Nedbank Group valued the division at $6 billion.

MTNs fibre business is expanding and will be the largest in Africa. In Zambia, they have already added more than 2,000 kilometres.

The Bid for a Telecom License in Ethiopia

In April 2021, both MTN and Vodafone have bid for new telecom licenses in Ethiopia. Ethiopia is the second-most populated country in Africa and represents the largest and last telco liberalization opportunity globally. The Ethiopian government is opening the market for the first time to international operators and responding soon with their choice.

If MTN is successful and wins the bid, they will hold 56% of the Ethiopian license with their partner Silk Road Fund – a state-owned company in China.

MTNs Environmental Impact

Scientists and policymakers can agree that vulnerability to climate change affects Africa’s population when compared globally. MTN believes that a business’s success and growth shouldn’t be at the expense of the planet’s future.

To reduce their impact on the environment, MTN focuses on the following:

  • Mobile and health
  • Energy and climate
  • Reducing their resource use

Investing in renewable resources, they have been aggressively pursuing several energy reductions and efficiency initiatives.

The following globally defined standards are what guide MTN:

  • MTN wants to achieve net-zero greenhouse emission by 2050 through a GMSA-led industry-wide plan
  • They participate annually in a Carbon Disclosure Project that aligns with the task force recommendations on climate-related financial disclosures
  • As a signatory for the Ten Principles of the United Nations Global Compact

First Quarter 2021 Results

A resilient and strong financial and operational performance was announced for the first quarter of 2021. Driven by data and fintech revenue gains, they had growth in service revenue that exceeded medium-term guidance.

MTN Group saw service revenue grow by 17.8% to R42.3 billion in constant currency terms at the end of March 2021. Earnings before interest, tax, depreciation and amortization (EBITDA) increased by 21.3%, with EBITDA margin widening from 42.7% to 44.2%.

MTN South Africa’s (MTN SA) EBITDA margin rose from 3.2% to 39.8%, driven by an 11.8% rise in service revenue and excellent cost containment.

An acceleration of fintech revenue was recorded, expanding by more than 31%. Fintech transaction values soared by 87% to $53 billion.

MTN Share Price JSE

Currently trading at ZAR 96.47 (as of May 9, 2021), MTN JSE (JSE: MTN) share prices have had a steady increase of 66.12% YTD while not paying out any dividends since early 2020. Their last dividend paid was at a 4.68% yield. Since 2011, MTN’s share price on the JSE has increased by 65.95% over this period.

The Bottom Line

Paving the way for businesses’ and individuals’ economic activity participations, MTN offers fintech and digital solutions. By doing so, they enrich lives and boost economic growth.

An efficient and innovative partnership between the private sector, governments, and all societal players can encourage digital and financial inclusion across the Middle East and Africa.

They believe they can bring new opportunities to those who have previously gotten excluded from the digital world and continue to fast-track quality, affordable, and universal internet access to everyone.

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