MTN Group has reported a very strong set of operational and financial results for 2020, displaying business resilience under COVID-19 pressures and a challenging macroeconomic environment.

Africa’s mobile operator has also announced its re-positioned strategy – Ambition 2025 – to accelerate growth and unlock the value of its infrastructure assets and platforms.

The Group added 29 million subscribers in the year, to reach a total of 280 million across 21 markets. It reported a 52% increase in adjusted headline earnings per share, a four-percentage point increase in return on equity to 17% and a more than doubling in operating cashflow to R28,3 billion.

“We continued to perform favourably against our medium-term targets,” said President and Chief Executive Officer Ralph Mupita. “In constant currency terms, service revenue grew 11,9% to R170 billion and EBITDA increased by 13,4%, maintaining our strong operating leverage. The Group’s EBITDA margin improved by 0,9pp to 42,7%, benefiting from the execution of our expense efficiency programme.”

The solid results were supported by pleasing growth in MTN’s larger operations as well as a broad-based improvement across all regions.

The Group continued to prioritise the health and safety of its people and mourned the loss of 10 MTN employees to COVID-19, after reporting a total of 1 404 infections in the period to the end of February 2021.

“We are pleased to have made a $25 million donation in support of the African Union’s programme to secure much-needed COVID-19 vaccines,” said Ralph. “This partnership deepens MTN’s role in the ongoing work to save lives in the markets in which we operate. Importantly, it aligns with our ambition to create shared value and ensure the continent’s future progress and prosperity.”

As well as managing the risks of COVID-19, the Group remains alive to the opportunities presented by the pandemic, particularly the accelerated need for digitalisation evidenced in the greater adoption and usage of MTN services.

In 2020, MTN added 19 million data users and almost 12 million MoMo users, to reach totals of over 114 million and 46 million respectively. The Group’s networks remained well-invested, with capex of R28,6 billion in 2020 and headroom to accommodate growth of more than 110% in data traffic in the year.

In the near-term, MTN is focused on de-leveraging the holding company and it reduced net debt by R12 billion, to R43 billion. The leverage ratio for the year, however, remained flat at 2,2x as cash upstreaming from Nigeria remained challenged. MTN concluded R4,3 billion of realisations of its asset realisation programme (ARP) and remains focused on completing some of its larger transactions, which did not proceed in the year due to challenging market conditions.

In this regard, MTN suspended the final dividend for 2020 due its near-term focus on faster de-leveraging of its holding company as well as three conditions which negatively impacted this objective. These related to uncertainties around cash upstreaming from Nigeria, the timing of ARP proceeds and COVID-19 impacts.

“In light of these material uncertainties, the Board has also suspended the dividend policy and anticipates communicating a revised medium-term dividend policy when we announce our 2021 results in March 2022,” said Ralph.

During this transition, the Board anticipates paying a total ordinary dividend of at least 260 cents per share for the 2021 financial year. Ralph added, “on assessment of the progress of cash upstreaming from Nigeria, ARP delivery and COVID-19 impacts, the Board will consider returning further cash to shareholders in the form of special dividends or share repurchases after the release of 2021 results.”

MTN also announced a revised strategy. “Further to our previous announcement regarding our intention to focus on our pan-Africa strategy, we completed a comprehensive strategy review in Q4 2020 and are excited to introduce ‘Ambition 2025’,” he said. “As part of this strategic repositioning, we are looking to structurally separate our infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses, over the medium-term.”

“Going forward, we believe that Ambition 2025 will position the business to capture the exciting opportunities across our markets and our medium-term guidance has been enhanced to reflect this accelerating growth outlook. To support this, we plan to invest approximately R29,1 billion in our network, fintech and digital services platforms in 2021.”