Business and Finance

MTN registers 9.1% growth as several businesses move operations online

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MTN Uganda has reported a 9.1% increase in after-tax profits to sh442.6b for the six months ended June 30, 2020, as several businesses move operations online.

The interim results for the period released last week show that the performance was driven by a strong performance of mobile money, data and digital income.

Digital revenues include income from the telecoms mobile advertising, e-Commerce and other media services it offers customers.

MTN revenues grew by 7.6% to sh900b in the period while data incomes rose from sh128b to sh167b, representing a 30% growth.

On the other hand, mobile money, which has played a central role in the lives of many Ugandans over the years, grew by 6.5% to sh214b. Active mobile money subscribers hit 7.4 million from 7.3 million in the period.

In April, as several businesses were shut down as a measure to combat the spread of the deadly pandemic, MTN Uganda’s chief executive officer Wim Vanhelleputte reported that they had witnessed unprecedented growth in demand for data.

In the last six months to June, active data subscribers increased to 3.2 million users from 3.1 million.

The growth in data could be attributed to a work from home approach by companies that depended largely on internet connectivity for business continuity.

“Following the peak impact of COVID-19 effects in April 2020, we are encouraged by the sequential recovery we have observed in key voice, data and fintech trends as restrictions have been gradually eased,” Rob Shuter, MTN Group chief executive officer said in a statement.

Voice revenues, which is still MTN’s biggest cash cow, grew from sh458b to sh471b. Overall, the telecom firm reported a 10% growth in subscriber base to 13.2 million up from 13 million.

The company also reported a rise in operating costs by 6% to sh456b during the period. For instance, there was a rise in staff costs from sh45.5b to sh48b.

MTN nearly tripled borrowing in the six months period by over 230% to sh367b from sh110b in the run-up to its 12-year operating license renewal.

In June, MTN said it paid $100m (sh370b) to the government to extend its license to June 2032. This settlement brought to an end a protracted negotiation with authorities.

In December 2019, MTN also concluded an agreement to dispose of its 49% stake in Ghana InterCo and Uganda InterCo. The Uganda Interco transaction closed on February for cash proceeds of $140 million and realised a profit of $23m.

Source: NewVision

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