MTN Rwandacell Plc (MTN.rw) 2021 Abridged Report
Comments from MTN Rwandacell PLC Chief Executive Officer – Mitwa Ng’ambi
Everything we do is underpinned by our pledge to ‘lead digital solutions for Rwanda’s progress’. In 2021, MTN Rwanda remained resilient in extremely challenging trading conditions and has delivered solid results that exceed all our medium-term targets, as we continued to execute on our Ambition 2025 strategy.
We invested heavily, with capex of Rwf32.7 billion, in the resilience of our network to cope with the significant increases in mobile data traffic volumes, to keep families connected, enable businesses to operate, facilitate online learning and assist government in providing critical services.
In addition, we signalled our firm commitment to Rwanda, our customers, and stakeholders by renewing our Individual License for a further 10 years. We also invited Rwandans to share directly in our success by listing by introduction on the Rwanda Stock Exchange and paying out Rwf 10 billion, or 50.4% of our distributable income, in dividends.
In line with our Ambition 2025 strategy to build the largest and most valuable platforms, we structurally separated our Fintech business into an independent wholly owned subsidiary of MTN Rwanda, Mobile Money Rwanda Ltd, which is fully operational. The fintech business continues to grow strongly, driving financial inclusion in Rwanda, with 424k Mobile Money users added to close the year with 3.7 million customers.
Furthermore, we have taken a step-change in our approach to Environmental, Social and Governance issues (“ESG”), which is a strategic priority highlighting our commitment to being a key partner to the communities we serve. MTN Group committed to achieve zero net carbon emissions by end of 2040. We as MTN Rwanda, in turn, launched MTN Project Zero in December 2021 which will see to a series of initiatives being rolled out to contribute to this 2040 target. We kicked off by replacing 15% of our vehicle fleet with hybrid electric cars and foresee further expansion in the coming years.
On the Social Front, we launched the Twese (“All of Us”) initiative with focus on making our products and services more accessible to people with disabilities. The interventions rolled out include, providing Mobile Money kiosks and starting capital to 60 agents with disabilities, setting up a video call option in our call centre for customers with hearing impairment, ensuring all our TV commercials include sign language interpretation and reserving at least 10% of our Graduate Program seats for persons with a disability.
In creating shared value, on 7 March 2022 our Board of Directors approved, for recommendation to the Shareholders at this year’s Annual General Meeting of Shareholders, a total dividend at RWF 4.98/share, approximately RWF 6.7 billion which represents 30% of the Profit After Tax (PAT) for 2021. This was done in line with the Dividend policy disclosure provided last year, where shareholders were informed that the Company would consider a dividend payout of 30% of PAT in 2022, due to the license fee payments that the company would need to conclude this year. The company continues to target minimum of 50.0% of PAT in subsequent years, over the medium term.
Operationally, our subscriber base grew to 6.4 million overall furthering our leadership to 63.4% market share. However, growth slowed down in the last quarter of the year following the introduction of new sim registration guidelines in September 2021. As new sim registration approved points of sale are rolled out, we expect a reacceleration in subscriber growth.
Overall, Service revenue grew by 24.1% and EBITDA by 20.4% to achieve an EBITDA margin of 47.7% supported by growth in voice, data, and mobile financial services. EBITDA margin softened by 1.3pp mainly due to increased 4G uptake resulting in additional data cost of sales as well as operational expenditure relating to the setup of a modernized Network Operating Centre (NOC), which was outsourced to improve on the network monitoring systems.
We continued to focus on driving our industry-leading connectivity business and voice revenue growth of 12.1%. Data revenue grew by 18.9% as active data users grew by 31.3% to 2.1 million, with robust growth in data usage which increased by 35.3%.
Our finance costs increased on the back of increased borrowings raised to finance our license renewal.
Looking ahead, we continue to pursue Ambition 2025 by honouring our commitment to our customers and stakeholders. We will continue to invest in driving our industry-leading connectivity business and scaling the largest and most valuable platforms in Rwanda.
The financial performance for the year 2021 showed the resilience of our business. Voice revenue increased by 12.1% and accounted for 47.4% of total service revenue. The performance was supported by our decision, at the start of the year, to make permanent our offer to
allow subscribers to use any voice bundle to call other mobile networks in Rwanda at no additional cost. This also had a significant positive impact on customer retention and acquisition.
Following the implementation of the new SIM Registration guidelines issued in July 2021 that limited SIM registrations and SIM swaps to service centres, connect shops and kiosks only, we saw a reduction in the number of new customer acquisitions. This reduced our year-on-year gross customer additions by 17%. Efforts are ongoing to build this back up in the new year as our registration points expand.
Data revenue maintained its positive momentum, rising by 18.9%. This was led by a combination of increased subscribers, usage (MB per user) and ultimately traffic, supported by increased network capacity. Data traffic rose by 39.9% YoY with data revenue accounting for 17.4% of service revenue.
Fintech revenue recorded strong YoY growth of 66.5%. This is comprised of revenue from both Mobile Money and Xtratime (our airtime lending service).Mobile Money revenue grew by 65.2% YoY.
After a challenging start to the year, Enterprise made a considerable recovery and recorded a 13.1% increase in revenue, supported by higher revenue from devices and fixed connectivity. The COVID-19 lockdown at the start of Q1 2021 resulted in a slow uptake of products and services offered to the businesses we serve. However, it also created an opportunity for the accelerated uptake of our home connectivity offer as people shifted to work-from-home. The number of homes connected with MTN Home solution closed the year at over 3800
EBITDA rose by 20.4%, translating to an EBITDA margin of 47.7%. We delivered a healthy free cash flow of Rwf57.0 billion. Depreciation and amortisation rose by 38.6% and this was partly affected by the license renewal fee which increased amortisation costs. Net finance costs increased by 27.2% on the back of an additional debt raised to support the license renewal, resulting in profit after tax (PAT) growth of 10.9%
Capital expenditure increased with continued investment in the network to enhance coverage and capacity. These investments grew by 50.6% (under IAS 17).In terms of our financial leverage, net debt to EBITDA as of 31 December 2021 was 1.0x and remains comfortably within
our covenant threshold of 2.5x. All our external financing is sourced locally.
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