MTN Quarterly Update - Turned a Corner

MTN released their quarterly update for the period ending 31 March 2019. The group increased the total number of subscribers by 4 million to 236.6 million. Active data subscribers also increased by 2.6 million to a total of 81.3 million. While MoMo (mobile money) customers sit at 28.3 million.

All of this helped MTN increase group service revenues by 10% to R33.2 billion, a number that has been the guidance in the near-term. This increase in service revenues was thanks to continued expansion in voice, data and FinTech revenues which increased 5.9%, 18.3% and 30.6% respectively.

The regions that led the performance were essentially MTN's biggest markets namely: Mzansi, Nigeria, and Ghana. MTN Mzansi has just over 24.1 million prepaid customers, down 5% quarter-on-quarter. Nigeria increased service revenues by 13.4% to R10.8 billion with margins of 53.3%. Byron wrote about MTN Ghana here.

Nigeria's securities regulator approved MTN's listing application for its Nigerian unit, valued at $5 billion, another African Unicorn! The company will register more than 20 billion shares in a direct listing by introduction. Remember the company has over 58 million subscribers in that market.

Jumia Technologies listed in New York recently, the listing diluted MTN's shareholding from 29.7% to 18.9%. That stake is now worth just under $600 million or around 4% of MTN's market cap. Not bad for a stake that was virtually valued at $0 by Mr. Market!

As part of broadening the fintech business, MTN also launched Africa's first instant messaging platform 'Ayoba' in Ivory Coast and Cameroon with further expansion into other markets and the integration of payments planned in the second half of the year.



We like MTN because they are going back to first principles and focusing more on the core telecoms business. This is going to help MTN pay down some debt with the proceeds from the asset sales. Mcebisi Jonas is now the new chair of the board, who is going to help in the compliance and monitoring process as the company focuses more and more on operational excellence.

The share price of MTN has gone from lows of R76.06 to highs of around R107.76 between reporting of last years full-year numbers to these quarterly numbers, a big change in sentiment for the company's securities. The past few years have been extremely volatile for this company but the worst is over I feel.