JSE-listed MTN Group has increased its dividend as it reports a strong financial performance for the year ended December 31, 2022.

During the year under review, MTN achieved a 3.8 percentage point expansion in return on equity to 23.4% and a 10% increase in the dividend to 330c a share.

Earnings before interest, taxes, depreciation and amortisation (Ebitda), before one-off items, increased 12.4% to R90.8-billion, supported by the company’s expense efficiency programme which yielded R2.7-billion in savings, mostly in Nigeria and South Africa.

The group’s Ebitda margin contracted 0.6 percentage points to 43.9%.

MTN posted a 40.4% increase in basic earnings per share to 1 071c during the year ended December 31, 2022, compared with the 763c posted in the prior year, while reported headline earnings per share (HEPS) increased 16.9% to 1 154c a share, with non-operational impacts decreasing HEPS by 159c.

The group’s Holding company leverage improved to 0.8x, compared with 1.0x in the year ended December 31, 2021.

“MTN delivered a solid operating and financial performance in 2022, as we continued to execute on our Ambition 2025 strategy. We are pleased with the business’s continued resilience under challenging global and regional macroeconomic conditions,” said MTN Group president and CEO Ralph Mupita.

MTN’s 2022 group service revenue increased 14.4% to R196.5-billion, supported by a 30.4% increase in data revenue to R73.7-billion and a 8.6% increase in fintech revenue to R17.3-billion.

“The structurally higher demand for data and fintech was sustained, with data traffic and fintech transactions volume through our ecosystem increasing by 32.6% and 33.9% respectively,” he said.

In the year to December 2022, total subscribers expanded 6.1% to 289.1-million, with data subscribers growing by more than 12% to 137-million and Mobile Money (MoMo) users up by 21% to 69-million.

“In our fintech business, active MoMo users rose by 21.4% to 69.1-million, while the volume of transactions processed through our platform grew by 33.9% year-on-year to 13.4-billion.”

To support this growth, MTN invested R38.2-billion into its networks, information technology and platform infrastructure in 2022, an increase of 17%, with a capital expenditure (capex) intensity of 18.5%.

During the year under review, MTN deployed 3 498 third-generation (3G) and 7 993 fourth-generation (4G) sites, culminating in the 3G and 4G coverage increasing by nine-million and 45-million people respectively.

In 2022, MTN rolled out 1 570 fifth-generation (5G) sites, mainly in South Africa and Nigeria, bringing the total number of 5G sites to 2 527.

The group further deployed more than 5 000 km of fibre and invested in subsea cables.

“The network investment expanded access to broadband services to almost 88% of the population (from 83% in 2021) in our markets as we focused on rural rollout, extending digital inclusion across Africa,” Mupita said, also highlighting a reduction in consumers’ average cost to communicate by nearly 23%.

“Alongside the increase in capital investment, our proactive commercial, expense efficiency, supply chain, network and financial resilience interventions helped alleviate the impact on results of a tough operating environment.”

In South Africa, operating conditions were significantly impacted by loadshedding, which worsened in the second half of the year.

Despite this, performance of MTN South Africa was solid, with growth in service revenue of 3.6% to almost R41-billion and an Ebitda margin of 39.2%.

Loadshedding impacted Ebitda by R695-million as the operating company incurred additional expenditure to meet the requirements of power, security and repairs, the latter owing to the vandalism of sites.

“We are encouraged by the performance of the business and the focus on network resilience. Amid unprecedented loadshedding and the intensified need for back-up power in the second half of 2022, MTN South Africa invested significantly to secure network resilience,” he adds.

“With the state of disaster regulations gazetted, South Africa now has a unique opportunity to accelerate efforts to secure the resilience of critical national infrastructure such as telecommunications. Government and business must jointly seize this moment and act decisively to deal with the quadruple crises of energy; logistics; crime and corruption; and youth unemployment. Inaction risks South Africa being a failed nation state.”

Meanwhile, MTN continued to execute on its four strategic priorities across its markets.

“To build the largest and most valuable platforms, we expanded our fintech ecosystem and made progress in separating our fintech business from our GSM business, receiving offers for strategic minority investments into the MTN Group fintech structure. We anticipate completing the process to review offers and engage investors in May 2023.”

“We also accelerated portfolio transformation, recording proceeds from asset realisations of R12-billion and signing a share purchase agreement with a subsidiary of M1 Group to acquire all our shares in MTN Afghanistan for a gross consideration of $35-million,” Mupita commented.

MTN maintained its medium-term, three-to-five-year, guidance; however, amid higher-than-expected power and network security costs, as well as a reassessment of the management fee agreement with the group, MTN South Africa’s Ebitda margin target range has been revised from between 39% and 42% to between 37% and 39%.

“We target capex of R37.4-billion for the 2023 financial year to be invested in coverage, capacity and the resilience of our networks, as well as driving the growth of our platforms over the medium term. Our target for capex intensity over the medium term remains in the 15% to 18% range.”

MTN will spend R9-billion of its targeted capex on the South African network.