MTN reports strong 2020 results, unveils Ambition 2025 strategy

10th March 2021 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

MTN reports strong 2020 results, unveils Ambition 2025 strategy

Photo by: Reuters

Telecommunications group MTN has announced a new repositioned strategy to accelerate growth and unlock the value of its infrastructure assets and platforms.

Ambition 2025 is the result of a comprehensive strategy review during the fourth quarter of 2020.

MTN plans to structurally separate its infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses over the medium-term, said MTN Group president and CEO Ralph Mupita.

“Going forward, we believe that Ambition 2025 will position the business to capture the exciting opportunities across our markets and our medium-term guidance has been enhanced to reflect this accelerating growth outlook," he explained.

In 2021, about R29.1-billion will be invested into the network, fintech and digital services platforms to support the new strategy.

Meanwhile, MTN posted double-digit growth in earnings during the year ended December 31, 2020, tracking well against its medium-term targets.

In constant currency terms, service revenue grew 11.9% to R170-billion and earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 13.4%.

The group's Ebitda margin improved by 0.9 percentage points to 42.7%.

During the year under review, MTN reported a 52% increase in adjusted headline earnings a share, a four-percentage point increase in return on equity to 17% and a more than doubling in operating cashflow to R28.3-billion.

Basic earnings a share increased by 87% to 946c, supported by the weaker rand, good operational performance and an improved contribution of the share of profits from associates and joint ventures.  

About 29-million subscribers were added during the year under review, bringing MTN's group subscriber base to 280-million across 21 markets.

In 2020, MTN added 19-million data users and nearly 12-million Mobile Money users, to reach totals of over 114-million and 46-million respectively.

MTN's networks remained well-invested, with capital expenditure of R28.6-billion in 2020 and headroom to accommodate growth of more than 110% in data traffic in the year.

"In the near-term, MTN is focused on deleveraging the holding company and it reduced net debt by R12-billion, to R43-billion," Mupita said.

"The leverage ratio for the year, however, remained flat at 2.2x as cash upstreaming from Nigeria remained challenged. MTN concluded R4.3-billion of realisations of its asset realisation programme (ARP) and remains focused on completing some of its larger transactions, which did not proceed in the year owing to challenging market conditions."

In line with the focus on a faster deleveraging of the holding company, as well as uncertainty around cash upstreaming from Nigeria, the timing of ARP proceeds and the impacts of the Covid-19 pandemic on the group, MTN has suspended the final dividend for 2020.

“In light of these material uncertainties, the board has also suspended the dividend policy and anticipates communicating a revised medium-term dividend policy when we announce our 2021 results in March 2022,” said Mupita.

MTN expects to pay a total ordinary dividend of at least 260c a share for the 2021 financial year and is considering returning further cash to shareholders through special dividends or share repurchases after the release of 2021 results.