On Impressive Half Year Report, MTN Notes Momentum On Ayoba, Its WhatsApp Challenger

MTN Group is winning markets and territories; H1 2019 was a good one for the company. Here are all the great things happening in this African evolving technology conglomerate:

• Impressive financial results: “We saw growth of 12% in adjusted headline earnings per share, which is the first time that we have delivered growth in this measure in recent years. Our service revenue grew just below 10% and EBITDA just above 10%, both on a constant currency basis. Our holding company leverage remains stable at 2.3x, well within our guidance range of 2 to 2.5x.”
• Solid User Growth: “strong subscriber growth of 7,7 million in the first six months of the year to reach a total of 240 million subscribers.  The number of active data users grew by 3,5 million to 82 million and our 30-day active Mobile Money users grew by 2,4 million to 30 million”.
• Listing in Nigeria and Jumia IPO: “We successfully completed the listing of MTN Nigeria on the Nigerian Stock Exchange and our e-commerce joint venture Jumia listed on the New York Stock Exchange.”
• Ayoba is growing: ” instant messaging platform, Ayoba, is now live in three of our West African markets and has more than 300 000 active monthly users.”
• “Super-agent licence in Nigeria”.

MTN needs to offer a 20% discount on airtime to encourage people to forget WhatsApp and use Ayoba! Provided you do not have WhatsApp on your device, you will get 20% bonus anytime you reload. If not, we may be concerned for another 2go. 

WhatsApp has a near-zero marginal cost which means it can be offered free to users. Competing against free is hard. We will see MTN’s game plan: zero-metering (i.e. you can use it even when you have no data) Ayoba is another game plan it can unleash to get over WhatsApp. Yet, WhatsApp continues to find how to grow. It is now in KaiOS feature phones.

KaiOS Technologies  maker of KaiOS, the leading mobile operating system for smart feature phones, and Facebook, the social media platform whose goal is to bring the world closer together, have announced WhatsApp’s availability for download in the KaiStore, on both 512MB and 256MB RAM devices. Further, by Q3 2019, most smart feature phones powered by KaiOS will have WhatsApp preinstalled upon shipment.

“KaiOS has been a critical partner in helping us bring private messaging to smart feature phones around the world. Providing WhatsApp on KaiOS helps bridge the digital gap to connect friends and family in a simple, reliable and secure way,” said Matt Idema, COO of WhatsApp.

The full press release below…

MTN Group has announced an encouraging set of results for the six months ended 30 June 2019 in the context of difficult trading conditions across its major markets.

Commenting on the results, Rob Shuter, MTN Group President and CEO, said: “We had a good first half, reporting solid financial results, good commercial momentum and encouraging strategic progress. We saw growth of 12% in adjusted headline earnings per share, which is the first time that we have delivered growth in this measure in recent years. Our service revenue grew just below 10% and EBITDA just above 10%, both on a constant currency basis. Our holding company leverage remains stable at 2.3x, well within our guidance range of 2 to 2.5x. And, as we grew revenue and carefully managed our investment programme, we saw capex intensity drop further, to 16,9%.

Commercially, we had strong subscriber growth of 7,7 million in the first six months of the year to reach a total of 240 million subscribers.  The number of active data users grew by 3,5 million to 82 million and our 30-day active Mobile Money users grew by 2,4 million to 30 million. Our continued focus on the customer experience has seen us record brand NPSˆ leadership across more than 50% of the portfolio, with 12 markets now leading. That contributed to MTN being named the most valuable South African brand in the Brand Finance South Africa 50 report and the most admired African brand by Brand Africa 100.

During the period we had some landmark events. We successfully completed the listing of MTN Nigeria on the Nigerian Stock Exchange and our e-commerce joint venture Jumia listed on the New York Stock Exchange. Within three months of announcing our asset realisation programme, which is targeting at least R15 billion over the next few years, we delivered R2,1 billion in proceeds.

Our advanced instant messaging platform, Ayoba, is now live in three of our West African markets and has more than 300 000 active monthly users. We are very pleased with the formal approval of our super-agent licence in Nigeria, which clears the way for the launch of phase 1 of our Nigeria fintech business while we await a banking licence.”

Operating environment

In South Africa, the group contended with a weak macroeconomic environment as well as the introduction of new end-user requirements and the repricing of out-of-bundle data rates. In Nigeria, economic activity was muted in the time of presidential elections and prior to the formation of the cabinet. In Iran, the rial weakened sharply after the re-imposition of US sanctions.

Financial performance

Notwithstanding this environment, in constant currency terms, service revenue grew by 9,7% to R67,9 billion and earnings before interest, taxation, depreciation and amortisation (EBITDA) expanded by 10,2% to R31,2 billion. The holding company net debt to EBITDA ratio remained stable at 2.3x, which is well within the group’s guidance range of 2.0 to 2.5x, and capex intensity dropped further to 16.9%, indicating greater efficiency in deploying assets.

Looking ahead, Shuter says: “MTN is well positioned to grow by leveraging our scale and enhancing our competitive position.

In the second half, in South Africa we will focus on the continued turnaround of the enterprise business, the recovery of prepaid and the launch of Mobile Money. In Nigeria, we will focus on the further rollout of 4G coverage, the launch of Ayoba and Music Time! as well as accelerating our fintech ambitions by fully leveraging our extensive distribution network to offer a range of transfer and payment services to our GSM customer base.

Across the rest of the portfolio we have six focus areas. These are: the continued turnaround of our operations in the West and Central Africa region; the resolution of some of the more complicated regulatory situations; the rollout of MusicTime! and Ayoba across the group; the asset realisation programme; launch of our pan-African MTN 4 Good campaign and delivering on our medium-term targets.”

Register for Tekedia Mini-MBA (Feb 10 - May 3, 2025), and join Prof Ndubuisi Ekekwe and our global faculty; click here.