MTN sticks to medium-term forecast as earnings rise

MTN Group, South Africa’s largest mobile operator by subscribers stuck to its medium-term forecast on Thursday, despite the coronavirus pandemic, as it posted higher core earnings for the first quarter.

However, the mobile operator cut its capital expenditure guidance for 2020 to between 21 billion rands ($1.13 billion) and 22 billion rands, from 28.3 billion rands when it reported 2019 results in March. Its shares had weakened 0.95 per cent to 49.14 rand.

MTN’s Chief Financial Officer Ralph Mupita said that while this financial year would be challenging, the company would maintain its 3-5 years medium-term guidance for now.

“We anticipate that disruptions in the supply chain and challenges in rolling out coverage under lockdown rules, combined with our emphasis on liquidity, will impact on our capex programme for the year,” MTN said.

MTN’s rival Vodacom Group on Monday postponed issuing its medium-term forecasts due to the uncertain economic outlook as the coronavirus pandemic unfolds.

MTN said its liquidity headroom, or cash and committed credit lines, at its holding company stood at about 45.2 billion rand, comprising 19.3 billion rand in cash and 25.8 billion rand in undrawn credit facilities.

MTN said the virus impact had shifted revenue trends from March, with data revenue increasing as governments order people to stay at home, roaming declining due to a drop in international travel and voice revenue coming under pressure.

Fintech revenue has also come under pressure due to the restriction of movement and discounted prices. At its three largest markets, data traffic in MTN Nigeria was up 32 per cent at the end of April versus February, up 56per cent in South Africa and up 39 per cent in Ghana.

Group service revenue for the three months ended March 31 rose by 11.1 per cent and earnings before interest, tax, depreciation and amortisation (EBITDA) jumped by 15.6 per cent, the mobile operator said. Lockdown restrictions across the group’s markets were only implemented from the last week of March.

The group recorded voice, data and fintech revenue growth of 6.3 per cent, 26.4 per cent and 26.0 per cent respectively, while digital revenue has returned to growth, increasing by 15.6 per cent as consumers access more digital services at home, it said.

MTN Nigeria and MTN Ghana generated strong double-digit service revenue growth, buoyed by data, voice and financial services.

In South Africa performance was largely negatively impacted by lower revenue from the Cell C roaming agreement and loss of roaming agreement with rival Telkom.