MTN, the largest mobile phone operator in Uganda by market value, has announced a 21.1% increase in its profit after tax for the third quarter (Q3), driven by a growing customer base and a higher demand for data and fintech services.
The profit after tax for the quarter that ended on September 30 rose by 21.1% to Shs 354.4 billion, compared to Shs 292.6 billion in the same period last year. The service revenue also grew by 15.2% to Shs 1.9 trillion. Because of this performance, the board has approved a second interim dividend of Shs 6.0 per share, which is higher than the previous year’s Shs 5.4.
“MTN Uganda maintained a positive growth momentum in the first nine months of 2023, on account of solid commercial execution and the improved performance of the current macroeconomic environment,” said MTN Uganda CEO Sylvia Mulinge in a statement on Nov.02. “We continued to invest in our customers through continuous product innovation and improved service delivery, setting up over 360 additional service points this year to provide a best-in-class customer experience.”
The average inflation in the period was 3.3%, lower than the 9.0% in the same period last year, due to a decrease in food and imported inflation. This led to a 0.5% reduction in the key lending rate to 9.5%, as the local currency remained stable with the help of increased foreign direct investment from the oil sector. Data revenue also increased by 22.0%, as the network quality and data value packages improved. The active data users grew by 23.0% to 7.5 million, and the data usage per active user rose by 20%.
Data traffic surged by 51.0% as the company invested in 4G and introduced 5G technology, which greatly improved the user experience. A large part of the data traffic was carried on the 4G network. The company also successfully increased smartphone adoption to 36.6%, a rise of 3.9 percentage points. This was achieved through initiatives such as the MTN Kabode flagship product and partnerships that offered better pricing and value propositions.
The company earned 18.1% more from fintech, as mobile money became more popular for P2P and money transfers. Fintech subscribers increased by 9.7% to 11.6 million, with many of them using the MoMo Pay platform. Digital revenue also soared by 130.0%, thanks to more demand for content value-added services and enterprise digital solutions that used open APIs. These solutions enhanced the products and services of the customers, who used MTN’s network assets, and boosted the company’s profitability.
Mulinge said the company’s impressive financial performance reflects its robust strategic planning and execution. She said the company maintained a capex intensity within its target range, allowing for significant investments in areas such as 5G, fibre deployment, and network enhancements.
Mulinge mentioned that MTN is ready to grow with it and as the central bank forecasts a 5.3% economic growth for the fiscal year 2022/2023, Uganda’s economy shows strength and resilience.
“As we close the year, our focus remains on maintaining the growth momentum of our overall portfolio with attention to our new growth segments of home broadband, enterprise and digital,” she said. “For our GSM business, our rigorous customer acquisition strategy and CVM initiatives around our voice propositions will be key to ensuring that we finish strong. On the data front, our focus is on optimising our 4G and 5G network with increased home and business activations and smartphone penetration to harness the wide investment in infrastructure and spectrum opportunity.”
The company follows its value-based capital allocation strategy to guide its decisions. It also aims to balance its capital structure and maintain its balance sheet strength. The company manages its funding and liquidity well, using cash flows and local currency-denominated facilities that are approved to meet its financial obligations.