Telecommunications giant MTN on Wednesday reported an increase in earnings for the year ended December 31, 2019, on the back of strong performance in Nigeria and Ghana.

The group posted a 9.8% increase in service revenue to R141.8-billion and a 13.6% surge in earnings before interest, taxes, depreciation and amortisation (Ebitda) to R64.1-billion for the year under review. 

The group’s Ebitda margin improved to 42.3%, while reported headline earnings a share increased to 468c from 337c in the preceding year.

Basic earnings a share during the year under review increased to 499c, from 485c in 2018.

"The group's results were supported by double-digit growth in service revenue by both MTN Nigeria and MTN Ghana, while economic pressure, new data use rules and a reassessment of the recognition criteria for roaming revenue from Cell C, owing to delayed payments under the networking roaming agreement, impacted our performance in South Africa," said MTN Group president and CEO Rob Shuter.

The outgoing CEO, due to step down in March 2021, said commercial momentum was achieved despite challenging macroeconomic conditions, particularly in South Africa, with muted economic activity and the rand weakening against the US dollar.

In Nigeria, service revenue was up 12.6% to R46.6-billion, while MTN Ghana achieved a 22.9% increase in service revenue to R13.7-billion.

Service revenue in South Africa edged up 0.4% to R36.4-billion, with revenue amounting to R283-million for network roaming services provided to Cell C during the period not recognised. 

In total, MTN recognised R1.8-billion of revenue from Cell C, and received cash of R2.5-billion during the year.

At a group level, voice revenue increased 4.2% on the back of the addition of 18-million customers to reach a total of 251-million, and data revenue jumped 22.4% as data users increased by 17-million to 95-million.

Fintech revenue climbed 27%, as customers grew by seven-million to 35-million active Mobile Money users generating a monthly annual revenue per user of $1.15.

"We have maintained our service revenue, Ebitda margin, capital expenditure (capex) intensity and return on equity (ROE) targets and increased our asset disposal target by a further R25-billion over the medium term. We also now target a holding company leverage ratio at below 2x,” he continued. 

The holding company leverage ratio improved to 2.2x, which is within the group’s guidance range of 2x to 2.5x.

The group reduced its capex intensity from 19.3% to 17.5%, indicating greater efficiency in deploying assets.

Driven by the strong earnings performance, operating cashflow increased by 18% and the ROE increased from 11.5% in 2018 to 14.3% in 2019 on an IAS17 basis.

MTN also delivered about R14-billion of asset realisation within the first year of the three-year R15-billion portfolio optimisation and asset realisation programme.

“Our asset realisation programme has performed better than anticipated. We have therefore revised our medium-term target to secure at least a further R25-billion in asset realisations over the medium term. This is within the context of our localisation ambitions, MTN’s portfolio of assets that have been identified as not long-term strategic and market conditions being conducive,” Shuter pointed out.

Meanwhile, Shuter will be stepping down from his role at the end of his contract in March 2021, with a succession process planned to enable a seamless handover.