Telecommunications giant MTN reported solid interim financial results on the back of strong growth in Nigeria.

For the six months ended June 30, the group’s service revenue expanded by 9.7% to R67.9-billion, led by growth of 12.2% by MTN Nigeria, 18.7% in MTN Ghana and just 3.3% by MTN South Africa.

“We continued to grow service revenue ahead of inflation, to increase our margin on earnings before interest, taxes, depreciation and amortisation (Ebitda) slightly and to reduce capital expenditure (capex) intensity,” said MTN president and CEO Rob Shuter on Thursday, reporting good commercial momentum and encouraging strategic progress.

The group's Ebitda margin improved marginally to 35.2%, while Ebitda expanded by 10.2% to R31.2-billion.

MTN Nigeria delivered a solid performance during the half-year under review, with strong voice and data revenue, double-digit service revenue growth and further improvements in the West African operation’s Ebitda margin.

A 1.5 percentage point improvement in the Nigerian operation’s Ebitda margin had been offset by the lower margin reported from MTN South Africa, which was impacted on by the reduction of out-of-bundle tariffs and a reassessment of revenue recognition criteria and adjustments required owing to delayed payments under a network roaming agreement with mobile operator Cell C.

Shuter explained that, in compliance with the International Financial Reporting Standards (IFRS) 15 Revenue from Contracts with Customers and the subsequent reassessment, MTN did not recognise R393-million in revenue for network roaming services provided to Cell C during the first half of the year.

“We are evaluating a sustainable solution to the agreement with Cell C,” he said, referring to a recent term agreement regarding a national roaming agreement.

Meanwhile, he added that, “We saw growth of 12% in adjusted headline earnings per share (HEPS) [to 297c], which is the first time that we have delivered growth in this measure in recent years.”

MTN’s reported HEPS, which under IFRS 16 was 195c, had been cut by in aggregate by 102 cents from a 39c impact of IFRS 16, about 8c relating to the Nigeria fine interest, hyperinflation amounting to 8c, the impact of foreign exchange gains and losses of 39c, and divestments of 8c.

HEPS were further impacted on by the depreciation of the Iranian rial, which resulted in lower earnings from MTN Irancell.

Basic earnings a share for the half-year under review increased to 247c, up from 244c, despite being negatively impacted by 39c, or 13.6%, owing to the implementation of IFRS 16.

Meanwhile, group voice revenue increased by 4.5% to R39.7-billion; group data revenue expanded by 19.8% to R16.1-billion; fintech grew 30.7% to R4.7-billion; and digital revenue contracted 42.5% to R1.4-billion, while the group’s enterprise and wholesale increased 6.8% and 127.9% respectively to R6.5-billion and R2.6-billion during the six months under review.

“As we grew revenue and carefully managed our investment programme, we saw capex intensity drop further to 16.9% [from 19.3% six months ago], indicating greater efficiency in deploying assets,” Shuter commented.

“We invested R12-billion, rolling out a total of 3 378 third-generation and 6 099 fourth-generation sites.”

The group posted strong subscriber growth of 7.7-million in the first six months of the year, reaching a total of 240-million subscribers.

The number of active data users grew by 3.5-million to 82-million and MTN’s 30-day active Mobile Money user base surged by 2.4-million to 30-million.

MTN declared an interim dividend of 195c, an increase of 11.4%.