MTN CONTINUES TO POINT TO THE FUTURE

Last week telecom company, MTN reported its 2023 net profit jumped 21.4 percent to sh493b, on the back of double digit growth across all revenue centers, including voice, which in 2022, for the first time registered lower revenues than the previous year.

In 2022 net profits came in at sh406b. Top line revenues were up 16.1 percent to sh2,629b from sh2,265billion in 2022.

While voice revenues grew by 11.6 percent to sh1,117b, data and mobile money revenues continued the now established trend of beating voice revenues for the third year running, accounting for 53 percent of revenues.

"Shareholders will be glad to learn that final dividend of sh6 per share is planned pending approval from the Annual General Meeting. This brings the total dividend per share to sh18 or a 10.6 percent dividend yield which compares favourably with fixed deposit rates in the market....

As an investment proposition the sh170 a share is becoming increasingly attractive as the earning per share is now sh22.02 up from sh18.14.

In a later conversation with CEO Sylvia Mulinge, who was reporting on her first complete year at the helm of Uganda’s largest company, she attributed the good results to her team’s execution of strategy. A focus on people, infrastructure development and the sharpening of the customer value proposition, led to the company’s market leading performance.

She was unsurprised by the recovery in voice revenues, pointing out that Ugandans are still buying more feature phones than smart phones, so there is still a lot of scope for voice revenues to grow, even if data and mobile money revenues will continue to dominate. In Kenya last year there were about 600,000 more smartphones than feature phones on the market.

Relatedly, as a sign of things to come data subscribers increased by 22.4 percent to 8.2 million. Given that MTN’s total subscriber base stands at 19.5 million, doubling of data subscribers is a real possibility in coming years.

This has far reaching ramifications for improving the ease of doing business in the country with the uptake of delivery services and other e-commerce options. MTN is aiding this growth with their MTNKabode programme by selling smartphones on credit, helping smartphone penetration grow to 39.1 percent. The comparable figure in Kenya is upwards of 60 percent.

 But even more exciting for me is the progress that MTN’s mobile money is making.

For starters the value of transactions jumped 44 percent to 133trillion from 92trillion in 2022. To put this in perspective, this year’s government budget is sh52trillion. What this means is that more and more of the money in circulation is being liberated from under our mattresses into the formal financial sector, where it can be useful not only to others who borrow it, but also to the owners who earn interest from it. MTN paid sh42b in interest on savings in 2023,  more than doubling the 2022 figure of sh19b.

And finally, that MTN has sh1,488b in deposits, which would easily have made them a top ten financial institutions in terms of deposits. The previous year deposits closed at 1,207b, a 23 percent increase, which means the deposits can double every three years.

The two movements, in data services and mobile money uptake, is where the telecom industry is going to have a transformative effect on the economy.

Mulinge is intimately familiar with the road ahead for MTN, having been Safaricom Kenya’s Chief Customer Officer, before she came to Uganda,

“If you think about the demographic dividend of this country, 70 percent of the population is under 35 and they're largely digital natives, so many of them will want to get on to our platform;” Mulinge said.

And then “Who is going to own the home? Because whoever gets into your home first, in terms of fiber connectivity and everything it will be very difficult to dislodge them.”