MTN Ghana – 2020 Interim results conference call transcript

By Published On: June 16th, 2022Categories: Corporate announcement, Transcripts

Operator

Good day, ladies and gentlemen, and welcome to MTN Ghana’s 2020 interim results conference call. All participants will be in listen-only mode. There will be an opportunity to ask questions when prompted. For the benefit of our participants that have joined via the HD web phone, please ensure that you have given your microphone permission to make yourself audible before accessing the question queue. If you should need assistance during the call please signal an operator by pressing * and then 0. Please note that this conference is being recorded. I would now like to hand the conference over to Mr Jeremiah Opoku. Please go ahead, sir.

Jeremiah Opoku

Thank you, Judith, and good afternoon everyone and thank you for joining us today to discuss MTN Ghana’s interim results for the period ended 30th June 2020. I am Jeremiah Opoku, Investor Relations Manager for MTN Ghana. With me on the call today are Selorm Adadevoh, CEO of MTN Ghana, Kobina Bentsi-Enchill, Acting CFO of MTN Ghana, and Group Investor Relations. Selorm will provide you with an overview of the company’s performance for the first half of the year and outlook for the rest of the year before we move on to the Q&A session which will be facilitated by the conference call operator. With that, over to you, Selorm.

Selorm Adadevoh

Thank you, Jeremiah. Good afternoon everyone. Thank you for making the time today to join us for this call. I’ll provide a brief overview of our performance for the first half of the year and then speak a little bit about the outlook for the rest of the year before we move on to Q&A.

MTN Ghana delivered a robust performance for the period despite macroeconomic challenges following the global outbreak of the COVID-19 pandemic. The half year service revenue increased by 19.3% underpinned by strong growth in voice, data, mobile money and digital revenue. Voice revenue was up 14.1% driven by a good increase in the number of active subscribers as well as various customer value management initiatives which helped to manage churn and improve usage. The contribution of voice to total revenue declined from 45.4% to 43.3% as other lines of revenue continued to grow faster than the traditional business in line with our revenue diversification strategy.

Data revenue recorded a strong growth of 21.7% and was attributable to the increase in active data users, continued growth in the number of smartphones on the network, and a general increase in demand and usage. Data revenue’s contribution to service revenue increased marginally from 28% to 28.5%. Mobile money revenue continued to show strong growth of 24.9% and benefitted from an increase in the number or active users, good growth in P2P transactional activity, and broader penetration of more advanced services such as retail merchant payments and international remittances. Mobile money revenue’s contribution to service revenue increased from 18.3% to 19.2%.

Digital revenue was robust, growing by 27.7% on the back of a 44.5% increase in the number of active subscribers, which is now 2.2 million. This performance was supported by the expansion of our digital portfolio including new gaming offerings, the renewal of the My MTN app and the launch of the Ayoba messaging app which allows non-smartphone users to communicate with smartphone users on the app. Digital revenue’s contribution to service revenue increased from 4% to 4.3%.

Our reported earnings before interest, tax, depreciation and amortisation, EBITDA grew by 29.1% with a margin expansion of 4.1% to 53.6%. This margin improvement was a result of our cost efficiency initiatives underpinned by distribution efficiencies. Our growth in revenue coupled with our cost efficiency initiatives resulted in a strong growth in profit after tax by 52.3%. MTN Ghana continues to prioritise its investment in infrastructure expansion and has invested GH₵715.6 million in capex to date, supporting significant improvement in network coverage, customer experience and quality of service. As part of the network expansion and quality of service improvements we rolled out 11 2G and 11 3G sites and upgraded 300 LTE 2600 sites. Our continued belief in the Ghana market and our significant investment in capex of $470 million over the past three years has led to improvements in customer experience and sustained subscriber growth.

MTN accepted and signed a GH₵450 million five-year medium-term financing arrangement out of the total offer of GH₵816 million received with seven local lenders to support the renewal of our 2G licence and acquisition of additional spectrum. We maintained a strong balance sheet, managing it in line with existing banking covenants.

As you all know the world was hit by COVID-19 in the first quarter of the year and this continued to have a significant impact on our business performance through the second quarter despite the easing of restrictions that had been imposed by the President of Ghana from 15th March 2020 through 1st June 2020. As a business we continued to experience delays in supply chain as well as the overall effects of the economic slowdown on our manufacturing and hospitality customers, plus a general decline of activity for our SME customers. We have also experienced an increase in demand for data services based on the changes to work places with remote working and e-learning for schools the norm today.

In our continuous support of the fight against COVID-19, Mobile Money Ltd, a wholly-owned subsidiary of Scancom Plc extended a free offer for all mobile money P2P transfers up to GH₵100 per day including increased limits on daily transactions and wallet balances to the end of September 2020. We were pleased to receive approval from the Bank of Ghana for our voluntary request to extend the free P2P transaction offer. This offer will save customers an estimated GH₵60 million to GH₵70 million in transactional fees while promoting the safety of Ghanaians and deepening financial inclusion.

The MTN Ghana Foundation committed to government GH₵5 million worth of personal protective equipment, PPE and other essentials to support front line medical staff and government in the fight against the COVID-19 pandemic. Internally we have deployed PPE and sanitisers across our branch network and implemented extended safety measures for our people at an estimated cost of GH₵22 million.

MTN Ghana has also supported government efforts in the fight against the pandemic by providing free access to over 200 websites for online education support for public and private institutions. This effort has supported over 4.5 million students and teachers who have consumed over 150 terabytes of data at a cost of over GH₵3 million as at the end of June 2020. This offer has been extended until the end of the pandemic.

In addition, MTN Ghana has also provided GH₵10,000 worth of free data to all its 200 university students on its MTN BRIGHT scholarship scheme. We remain focussed on our people, our customers, our network resilience and efficiency in delivering our quest to make the lives of our customers a whole lot brighter in these uncertain times.

Turning to the issue of SMP, as we all know from our earlier releases in June the NCA, our regulator classified MTN Ghana as a Significant Market Power, SMP, meaning that special regulatory restrictions will be enforced on MTN Ghana to potentially limit the company’s growth, performance, innovativeness and its competitiveness in the telecoms market. Broadly, the NCA proposed measures that include the application of a 30% asymmetric interconnect rate reduction for two years, a price floor/ceiling on voice, data, SMS and mobile money, the review and approval of all MTN prices by the NCA, the removal of on-net/off-net price differentials and the implementation of a national roaming scheme.

MTN Ghana acknowledges the NCA’s duties and power to promote fair competition amongst licensed operators in Ghana’s telecommunications sector. However, the manner of the recent declaration of MTN as an SMP raises concerns about clear procedural breaches and substantive issues. After engaging and sharing our views on the matter with the regulator and other stakeholders, and after further consultations, MTN Ghana has made the difficult decision and as a last resort to resort to the law courts for redress in the form of a judicial review of the NCA’s decision. Thi