MTN Ghana – Q1 2021 results conference call transcript

By Published On: June 17th, 2022Categories: Corporate announcement, Transcripts


Good day ladies and gentlemen, and welcome to the MTN Ghana 2021 Q1 results call. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing * then 0. Please note that this call is being recorded. I would now like to hand the conference over to Jeremiah Opoku. Please go ahead.

Jeremiah Opoku

Thank you Irene. Good afternoon everyone and thank you for joining us today to discuss MTN Ghana’s first quarter results for the period ended 31st March 2021. I’m Jeremiah Opoku, Investor Relations Manager for MTN Ghana. With me on the call are Selorm Adadevoh, CEO of MTN Ghana, Kobina Bentsi-Enchill, our Acting CFO, and Thato Motlanthe, Group Executive for Investor Relations. Selorm will share an overview of our performance for the quarter and outlook or the rest of the year before we move on to the Q&A session which will be facilitated by the conference call operator. So with that, over to you, Selorm.

Selorm Adadevoh

Thank you, Jeremiah. Good afternoon to everyone and thank you for making time to join us on this call today. I will briefly talk about our performance for the first quarter and touch on the outlook for the rest of 2021. Our performance in Q1 2021 was influenced by the protracted impact of the pandemic, albeit the recovery of the Ghana economy. As part of our Yello Hope initiatives MTN Ghana delivered 356,000 doses of the AstraZeneca vaccine in support of the government’s efforts to vaccinate every Ghanaian by the end of the year. This formed part of MTN Group’s $25 million donation to support the African Union’s COVID-19 vaccination programme and helped secure up to 7 million doses of the vaccine for health workers across the continent.

The extension of the zero rated mobile money P2P transfers up to a value of ₵100 per day continued through the period and we will ensure this offer remains available throughout the period of the pandemic. MTN remains committed to providing support to combat COVID-19. As we progress through 2021 we will remain focussed on supporting our people, our customers and government while ensuring network resilience as this is critical to the continued recovery of the economy.

Turning to our operational performance for the first quarter anchored in the strong commercial execution of various Ambition 2025 initiatives in data, mobile money and digital. We grew our subscriber base by 0.6 million to 25 million as we improved our network and customer experience initiatives. The continued demand for data and increased adoption of more digital payment services supported our active data subscriber growth of 0.4 million and mobile money users growth of 0.1 million. The number of MoMo merchants expanded by 11,000 to 183,000 and our agent network by 15,000 to 221,000.

We improved on our Ayoba offering with enhancements including payment integration and new business to customer channels, and we also enhanced self service offerings on the My MTN App, introducing mobile and mobile broadband channels to the app to improve the feature set and customer experience. We are alive to the opportunities in this era of accelerated digitisation, and to this end we have committed to spend $149 million in total capex in 2021 to meet the demand of digital services and help maintain the quality and availability of services for our data and mobile money customers.

Our continued execution of our revenue diversification strategy resulted in a growth of 22.4% year on year in service revenue. This was driven by resilient growth in both data and mobile money. Voice revenue grew by 3.3% year on year over the period supported by a 2.4% growth in our subscriber base and the execution of various customer value management initiatives. The voice performance was negatively impacted by the implementation of the 30% asymmetric interconnect rate reduction in October 2020. The contribution of voice to service revenue continued to decline from 45.6% to 38.5% year on year. Data revenue grew by 40.4% year on year driven by a 4.4% increase in active data subscribers and higher number of smartphones on the network and an increase in data traffic.

Data revenue contribution to service revenue increased from 26.5% to 30.4% year on year. Mobile money revenue grew at 48.4% year on year. This was driven largely by 1.2% growth in active users, higher P2P transactional activity and growth in advanced services such as retail merchant payments, insurance and international remittances. The contribution of mobile money to service revenue increased from 19.4% to 23.5% year on year.

We recorded a 16.4% year on year decline in digital revenue. The revenue decline was due to the application of the principal versus agent IFRS 15 accounting standard across the MTN Group in 2020. Normalising for this though, digital revenue would have recorded a 23.2% year on year growth. In line with our broader medium term target to improve our margins and prudently manage our costs, we recorded a 24.6% growth in EBITDA with a corresponding margin expansion of 1.2% to 54.6%. The improvement in our margin was achieved through strong top line growth and diligent execution of our expense efficiency initiatives underpinned by continued digital distribution efficiencies.

Turning to the issue of SMP, Significant Market Power, we remain focused on engaging the regulator and other key stakeholders on the declaration of MTN Ghana as a Significant Market Power by the NCA. We believe the outcome of these engagements will help develop the telecoms industry to the benefit of all stakeholders. We remain grateful for the NCA, the Ministry of Communications and all key stakeholders for their continued support and commitment to engagement with a view to finding an amicable resolution on the implementation of the remaining six remedies.

In terms of updates to localisation, Scancom Plc and Mobile Money Ltd, MTN continues to work with the government of Ghana and key regulatory stakeholders to achieve all agreed localisation requirements. MTN Group remains committed to sell a further 8.1% of its investment in Scancom Plc to achieve a 25% localisation. This follows shareholder approval of the employee share schemes which represent about 4.4% local ownership of issued shares of Scancom Plc. In line with our Ambition 2025 strategy and in compliance with the license requirements of the Payment Systems and Services Act 2019, Act 987, MTN is in discussions with its advisors on the most efficient way to localise 30% of Mobile Money Ltd., a wholly owned subsidiary of Scancom Plc. We look forward to providing further updates on our progress in subsequent releases.

In terms of the outlook we believe that the remainder of 2021 will be shaped by the extent of the impact of the COVID-19 pandemic. The projected growth for the Ghanaian economy as was read in the 2021 Ghana budget is expected to be 5%. This expectation reflects the optimism regarding the potential benefits of widespread vaccinations in 2021 along with additional policy support to drive economic recovery. The distribution of vaccines worldwide is expected to help drive consumer and business confidence and positively impact financial markets. While the economic growth projection for the Ghana economy is optimistic, we remain cautious as the potential longer term dampening effect of the COVID-19 pandemic on the Ghana economy yare yet to be ascertained. We maintain our service revenue growth medium term target of 13% to 15% as we employ various initiatives to grow our data, digital and mobile money businesses. We will continue with our prudent approach to managing cost to deliver on our commitment to margin expansion. MTN Ghana is committed to supporting government’s ambition of a digital Ghana, and we have designated 2021 as the of the customer and the digital experience. We are excited about the opportunity to be part of the Ghana digital journey as we play our part in the many digital initiatives highlighted. At this point I will hand over to the operator for Q&A to being. Thank you very much. I look forward to chatting to you shortly.


Thank you, sir. Ladies and gentlemen, if anyone would like to ask a question, you are welcome to press * then 1 on your touchtone phone or on the keypad on your screen. If you however wish to withdraw the question,