MTN ups capital expenditure guidance as conditions improve
Commercial trends have been encouraging as Covid-19 restrictions have eased, the mobile operator says
Africa’s largest telecoms operator, MTN, has raised its capital expenditure forecast for 2020, saying it is seeing encouraging trends as Covid-19 restrictions ease across the regions in which it operates.
The group now expects to spend R26bn on capital expenditure, from guidance of R24bn previously, with MTN encouraged by a revival in economic activity during its third quarter, or the three months to end-September.
MTN reported a spike in data use and pressure on voice traffic during the pandemic. Overall data traffic has remained resilient at elevated levels, the group said, though it has observed some easing from the peaks it saw recently.
Voice traffic and revenue, which initially came under significant pressure, have been recovering, the group said, adding it was looking to accelerate its network investments.
“Although trading conditions remain challenging, we delivered a solid performance in the third quarter during which the positive momentum achieved in key traffic and revenue trends towards the end of the first half was sustained,” said group president and CEO Ralph Mupita.
Subscribers increased by 12-million to 273.4-million in the quarter to end-September, while active data subscribers increased by 5.3-million to 107.2-million.
MTN reported group service revenue rose 11.4% in the nine months to end-September, but was under some strain in SA, where it only rose 2.1%.
The discontinuation of MTN’s roaming agreement with Telkom, which concluded in June 2019, and the effect of accounting for Cell C roaming revenue on a cash basis had a negative effect on MTN SA’s results.
Excluding the effect of national roaming, MTN SA would have recorded service revenue growth of 3.4% in the first nine months of the year, the company said. SA’s third-quarter performance was encouraging, however, growing 11.8% year on year.
Group earnings before interest, taxation, depreciation and amortisation (ebitda) — a measure of underlying operational profitability — grew 13.9% in the nine months to end-September.
In morning trade on Friday, MTN’s share had jumped 5.49% to R58.46, on track for its best day in more than two months. MTN has fallen about 29% so far in 2020.
Update: October 30 2020
This article has been updated with share price information
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