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Behind MTN’s income decline

But the telco recorded 5.8 % growth in net income to Shs 340.4 billion

Kampala, Uganda | ISAAC KHISA | Uganda’s biggest telecom firm, MTN Uganda, said a one-off payment for interim operating license and contract termination of a service provider saw its full year income reduce by Shs 62.3 billion.

The telecom firm recorded a 5.8% growth in net profit to Shs 340.4billion for the year ended Dec. 2021 on the back of a nearly 11% growth in subscribers to 15.7million.

The payments consisted of Shs 51billion (US$14.1million) to Uganda Communications Commission for the period Oct.20, 2018,when MTN’s second previous national operator license expired, to July 1, 2020 when the new National Telecom Operator (NTO) license was issued, and Shs 11.3billion (US$3million) paid to Invesco Uganda for service contract termination.

MTN Uganda’s license was renewed for 12 years in July 2020 for $100 million on condition that lists at least 20% of its shares on the Uganda Securities Exchange.

The company’s revenue, meanwhile, grew 9.4% to hit the Shs2trillion mark, driven by growth in subscribers and the subsequent growth in demand for data and mobile money services.

Internet users grew 16% to 5.3million, underpinned by data growth initiatives targeted at converting incidental users on the base into active users and acquiring new data users through smart phone growth acceleration program. Similarly, mobile money subscribers grew by a similar margin to 9.9million customers.

In terms of operation, the telco build 664 4G new sites, increasing the 4G coverage to 62.7% countywide. It also received additional spectrum resources to boost the quality of internet.

This comes at the time the company’s share price stands at merely Shs180 per share, far below the IPO price of Shs 220 in November last year.

Future outlook bright

MTN Uganda CEO, Wim Vanhelleputte, said as the micro-economic environment improves following the opening up of the economy as coronavirus spread slows, so is the telco’s continued investment to benefit from the trend.

He said the telco is already investing US$300 million in the next three years to fulfil the new NTO license obligation, which emphasises that at least 90% of the country’s landmass be coved by their network by 2024.

“Our initiatives will continue to support 2G voice and 3G voice traffic offloading which will reduce 2G voice congestion and allow to create a better customer experience,” he said.

“We see significant opportunity for data growth in fixed connectivity through MTN Wakanet, fibre to home and fibre to business, and will continue with investment in that segment.

“We are currently progressing with the implementation of a new pricing framework for the fixed data connectivity services to widen our customer catchment area.”

Wim, however, noted that the mobile money revenues continues to be impacted by the 0.5% withdrawal tax introduced in 2018 and increased competition from other fintech platforms.

Andrew Bugembe, Chief Finance Officer at MTN Uganda said the telco now anticipate a low double digit growth in service revenue over the medium term.

He said the telco plans to continue with investments in network and platforms to drive digital and financial inclusion in the country as it grows the business whilst ensuring that shareholders receive a fair share of returns to their investments.

“The forecasted dividend pay-out ratio is projected to range 75% to 80%,” he said.


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