MTN Ghana grows earning by a third in first quarter of 2020
The company also increased subscribers and data subscribers by 6.2% and 5.4%, respectively, but warns of rough times ahead amid Covid-19
Africa’s largest mobile operator MTN said on Wednesday that it grew its earnings by more than a third in its Ghana operation for the first quarter of 2020.
MTN Ghana grew its service revenue by 20.4% to GH¢1.43bn (R4.5bn), for the three months to March, while earnings before interest, tax, depreciation and amortisation were up 34.5% to GH¢768m. This was underpinned by double-digit growth in voice, data and Mobile Money revenue.
The company said subscribers increased by 6.2% to 23.9-million for the period, while data subscribers rose by 5.4% to 21.2-million.
The contribution of voice to total service revenue decreased from 47.1% to 45.6%, “as other lines of revenue continued to grow faster than the traditional business in line with our revenue diversification strategy”, said MTN.
Data revenues accounted for 26.5% of total service revenue.
Profit after tax stood at GH¢349.6m for the period, while GH¢605.2m was spent on expanding the operator’s network in Ghana.
MTN started the year with a strong performance in the first quarter and optimism about the financial year, it said. However, “the uncertainty associated with the likely duration and related economic impact of the Covid-19 pandemic calls for a more measured outlook in the near-term”.
The potential areas of negative effect and focus include employee safety; supply chain delays and availability; management of credit and liquidity; currency risk; counter party risk; and the potential revenue impact from reduced consumer spend.
The company said its voice and Mobile Money revenue have experienced an immediate effect from the economic disruptions and government interventions to manage the Covid-19 crisis, “based on early trends”.
The decline in voice traffic and Mobile Money transactional activity is largely due to a slowdown in economic activity and a reduction in consumer discretionary spend.
Ultimately, the impact of the pandemic on the global economy, coupled with the sharp fall in oil prices, is likely to significantly slow down GDP growth in Ghana, MTN warned.
MTN’s Nigeria unit reported that it had added 4.2-million subscribers during the same quarter, growth of 6.5%, with 4G coverage rising to 48% of the country’s population, from 44% at the end of December.
Profit before tax increased by 8.9% to 76.3-billion naira (R3.6bn) during the quarter, year on year, while service revenue rose 16.7%.