MTN Condensed consolidated financial results for the six months ended
30 June 2020
MTN Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584/06)
(Share code MTN)
(“MTN” or “the group”)
Condensed consolidated financial results for the six months ended
30 June 2020
MTN is an emerging market mobile operator with a clear vision to lead the delivery of
a bold, new digital world to our 262 million subscribers across 21 operations. We are
inspired by our belief that everyone deserves the benefits of a modern connected life.
- Subscribers increased by 10,6 million to 261,5 million
- Group service revenue grew by 9,4%*
- EBITDA margin improved by 6,4pp to 49,7% (up 1,2pp* to 43,1%*)
- EBITDA (before once-off items) grew by 21,0% (10,9%*)
- Reported group HEPS at 430 cps, up 120,5%
- Non-operational impacts increased HEPS by 46 cps
- Group leverage stable at net debt to EBITDA of 1,1x, holding company leverage
increased to 2,7x
- Return on equity (ROE) improved to 14,1%
- No interim dividend declared due to uncertainties resulting from COVID-19
- Future focus on pan-African strategy, orderly exit of Middle Eastern assets
* Constant currency information after accounting for the impact of the pro forma adjustments as defined.
- EBITDA is defined as earnings before finance income and finance costs (which includes gains or losses
on foreign exchange transactions), tax, depreciation and amortisation, and is also presented before
recognising the following items: impairment of goodwill and joint ventures; net monetary gain resulting
from the application of hyperinflation; share of results of associates and joint ventures after tax;
hyperinflation; gain on disposal of tower associates; impairment loss on remeasurement of disposal
group; and gain on disposal/dilution of investment in associates and joint ventures (Travelstart and
Jumia). EBITDA including once-off items increased 33,1%
ROE is calculated based on reported group HEPS of 430 cps after adjusting for non-operational impacts
of 46 cps
Any forward-looking financial information disclosed in this results announcement has not been reviewed
or audited or otherwise reported on by our external joint auditors.
Certain information presented in these results constitutes pro forma financial information. The
responsibility for preparing and presenting the pro forma financial information and for the
completeness and accuracy of the pro forma financial information is that of the directors of the
company. This is presented for illustrative purposes only. Because of its nature, the pro forma financial
information may not fairly present MTN’s financial position, changes in equity, and results of operations
or cash flows. It has not been audited or reviewed or otherwise reported on by our external joint auditors.
Certain financial information presented in these consolidated financial results has been prepared
excluding the impact of hyperinflation, impairments of goodwill; PP&E and associates, gain on disposal
of tower associates; impairment loss on remeasurement of disposal group, the Nigerian regulatory
fine (consisting of the re-measurement impact when the settlement was entered into and the finance
costs recognised as a result of the unwind of the initial discounting of the liability), gain on dilution of
Jumia, impairment of investment in MEIH, impairment of Iran receivable, gain on Travelstart disposal
and impact of the adoption of IFRS 16 (the pro forma adjustments) and constitutes pro forma financial
information to the extent that it is not extracted from the segment disclosure included in the reviewed
condensed consolidated interim financial statements for the six months ended 30 June 2020. This pro
forma financial information has been presented to eliminate the impact of the pro forma adjustments
from the consolidated financial results to achieve a comparable (YoY) analysis. The pro forma
adjustments have been calculated in terms of the group accounting policies which are consistent with
International Financial Reporting Standards (IFRS) and as disclosed in the consolidated financial
statements for the year ended 31 December 2019, except for the changes in accounting policies as a
result of the adoption of the accounting standards effective 1 January 2019 and the voluntary change
in policy relating to the treatment of foreign currency translation reserves (FCTR).
IAS 21 The Effects of Changes in Foreign Exchange Rates (IAS 21) requires that on the disposal of a
foreign operation, the cumulative amount of the exchange differences relating to that foreign
operation, recognised in other comprehensive income and accumulated in FCTR in equity, shall be
reclassified from equity to profit or loss as a reclassification adjustment when the gain or loss on
disposal is recognised. Two accepted methods exist for recycling FCTR where the investments in
foreign operations are held by an intermediate parent with a different functional currency than the
entity disposed of and the ultimate parent, the step-by-step approach and the direct approach. The
group has accordingly changed its accounting policy on the reclassification of FCTR on disposal of
foreign operations held by an intermediate parent where the functional currency of the foreign
operation and intermediate parent is different to that of the ultimate parent from the step-by-step
method to the direct method.
Constant currency information has been presented to illustrate the impact of changes in currency rates
on the group's results. In determining the change in constant currency terms, the prior financial
reporting period’s results have been adjusted to the current period average exchange rates determined
as the weighted average of the monthly exchange rates. The measurement has been performed for each
of the group's currencies, materially being that of the US dollar and Nigerian naira. The constant
currency growth percentage has been calculated based on the prior year constant currency results
compared to the current year results. In addition, in respect of MTN Irancell, MTN Sudan, MTN South
Sudan and MTN Syria, the constant currency information has been prepared excluding the impact of
hyperinflation. The economies of Sudan, South Sudan and Syria were assessed to be hyperinflationary
for the period under review and hyperinflation accounting was applied.
This short-form announcement is the responsibility of the directors and represents only a summary of
the information contained in the full interim financial results. Consequently, it does not contain full or
complete details. Any investment decisions made by investors and/or shareholders should be based on
consideration of the full interim financial results as a whole and investors and/or shareholders are
encouraged to review the full interim financial results.
This short-form announcement does not include the information required pursuant to paragraph 16A(j)
of IAS 34. This short-form announcement is itself not reviewed or audited but is extracted from the
underlying reviewed information.
The full interim financial results including the unmodified review report thereon by the joint external
auditors, PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Grant Thornton Inc., are available as
On the company's website at:
and on the JSE's website at:
For inspection at our registered offices at no charge, and at the offices of our sponsors from 09:00 to
Copies of the full interim financials may be requested by emailing email@example.com or calling
083 912 2300.
The group’s results are presented in line with the group’s operational structure. This is South Africa,
Nigeria, the Southern and East Africa and Ghana (SEAGHA) region, the West and Central Africa (WECA)
region and the Middle East and North Africa (MENA) region and their respective underlying operations.
The SEAGHA region includes Ghana, Uganda, Zambia, Rwanda, South Sudan, Botswana (joint venture-
equity accounted), eSwatini (joint venture-equity accounted) and Business Group. The WECA region
includes Cameroon, Ivory Coast, Benin, Congo-Brazzaville, Liberia, Guinea Conakry and Guinea Bissau.
The MENA region includes Iran (joint venture-equity accounted), Syria, Sudan, Yemen, and Afghanistan.
Although Iran, Botswana and eSwatini form part of their respective regions geographically and
operationally, they are excluded from their respective regional results because they are equity
accounted for by the group.
Group president and CEO, Rob Shuter comments:
“MTN delivered strong results for the period against the backdrop of difficult trading
conditions, exacerbated by the unprecedented socio and macroeconomic challenges
caused by the COVID-19 pandemic. With service revenue growth of 9,4%* and EBITDA
growth of 10,9%*, the group’s EBITDA margin improved by 1,2pp* to 43,1%* as our
group efficiency programme continued to bear fruit. Group leverage remained stable
at a group net debt to EBITDA ratio of 1.1x. The holding company (holdco) leverage
ratio increased to 2,7x from 2,2x at December 2019, impacted by the weaker rand and
lower upstreaming from operating companies. We invested R10,1 billion in our
networks, focussing on capacity and resilience as COVID-19 lockdown constraints
impacted network rollout.
Amongst the larger opco’s, MTN Ghana delivered another strong performance in H1,
while MTN Nigeria achieved continued solid growth in a challenging environment. MTN
South Africa (MTN SA) reported a pleasing turnaround in its underlying consumer and
enterprise business units as well as an expansion in EBITDA margin.
Commercial momentum continued, and we added 10,6 million subscribers to reach a
total base of 261,5 million and reached a significant milestone in surpassing the 100
million mark of active data users. We recorded 38,3 million MoMo users and in Nigeria
added 114 000 agents to reach 222 000 registered agents. 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
As we navigate the pandemic and its effects, we have prioritised looking after our
people, customers and networks while focusing on efficiencies. Work from home
programmes continue for our people; our Y’ello Hope Packages are helping to ease
customers’ financial pressures and we continue to support various other initiatives
across our markets to limit the impact of the pandemic on society as a whole.
Our balance sheet and liquidity remain resilient despite the challenging environment
and was supported by strong operating free cash flows, which increased by 117,8%.
Given the significant uncertainties in our operating environment brought about by
COVID-19 we have resolved not to declare an interim dividend for 2020. Should
conditions warrant a final dividend, this would be no more than 390c per share,
aligned to the current dividend policy.
MTN has resolved to simplify its portfolio and focus on its pan-African strategy and
will therefore be exiting its Middle Eastern assets in an orderly manner over the
medium-term. As a first step we are in advanced discussions to sell our 75% stake in
Group service revenue increased by 9,4%* to R80,2 billion (2019: R67,9 billion). This
was led by growth of 12,4%* in MTN Nigeria and 19,4%* in MTN Ghana. MTN SA
recorded a 2.5% decline in service revenue, as a result of the lost national roaming
revenues arising from the discontinuation of our roaming agreement with Telkom
and effects of the continued accounting for Cell C revenue on a cash basis. The
continued turnaround in MTN SA’s consumer and enterprise businesses has however
supported a pleasing improvement in sequential service revenue growth trend in the
Basic earnings per share, which includes the gain on disposal of our tower
associates, increased by 165,4% to 674 cents from 254 cents (June 2019), supported
by the weaker rand, an overall healthier operational performance as well as an
improved contribution of share of profits from JVs and associates.
Reported headline earnings per share (HEPS) increased by 120,5% to 430 cents from
195 cents in June 2019. HEPS were positively impacted in aggregate by 46 cents from
the following items: 0 cents relating to the Nigeria fine interest (-8 cents in 2019);
hyperinflation (excluding impairments) of 10 cents (-8 cents in 2019); the impact of
foreign exchange gains and losses of 28 cents (-39 cents in 2019) and reversal of the
time value loss recognised on the Iran receivable of 8 cents (0 cents in 2019).
Portfolio optimisation and asset realisation programme
Our asset realisation programme (ARP), launched in March 2019 and enhanced in
March 2020, aims to reduce debt, simplify our portfolio, reduce risk, improve returns
and realise capital of at least a further R25 billion over three to five years.
During H1 we concluded the disposal of our 49% equity holdings in Ghana Tower
Interco B.V. and Uganda Tower Interco B.V to AT Sher Netherlands Cooperatief U.A.,
and received cash proceeds of US$524 million. This completed the first phase of our
ARP, with the full cR15 billion of the initial three-year plan realised within the first 12
The COVID-19 pandemic and flux in global oil prices has brought about extraordinary
macroeconomic uncertainty and major volatility in financial markets. This has
impacted our ability to continue with further realisations in the short-term. We remain
committed to execute on the ARP over the medium-term and have made significant
progress in laying the groundwork for when conditions become more conducive.
Our 20% shareholding in the carrier business Belgacom International Carrier
Services SA (BICS) is included in those assets classified as not long-term strategic.
MTN and its co-shareholders in BICS are in discussions regarding a potential sale of
a controlling stake in the business. BICS has accordingly been classified as a non-
current asset held for sale on 5 August 2020. At 30 June 2020, the carrying amount
of the investment in associate was R2,3 billion and the accumulated FCTR gain
related to BICS was R1,4 billion.
MTN to focus on its pan-African strategy
As part of the review of our portfolio, we believe the group is best served to focus on
its pan-African strategy and to simplify its portfolio by exiting the Middle East region
in an orderly manner over the medium-term. The Middle East assets contributed less
than 4% to group EBITDA in H1.
As part of this process we are in advanced discussions to sell our 75% stake in MTN
Syria to TeleInvest, which is the minority shareholder in MTN Syria with a 25% holding.
MTN Syria contributed 0,7% to MTN’s reported EBITDA in H1 2020. The net assets
attributable to MTN Syria in the MTN Group accounts have been written down to the
estimated recoverable amount of R1,4 billion (US$80 million). The foreign currency
translation loss of R4,8 billion as at 30 June 2020, that has accumulated over time,
will be released to the income statement on conclusion of the transaction. This will
negatively impact EPS, but will have no material impact on HEPS, cash flow and the
Capital allocation priorities and suspension of interim dividend
We are committed to a disciplined capital allocation framework that prioritises the
deployment of our resources to growth, supported by investment in our network;
reduction of debt and management of our funding mix and liquidity; and dividend
We are pleased with the performance and resilience of our networks, which have ably
sustained the explosion of growth in traffic, not only during the recent COVID-19
crisis, but over the past few years as we have connected more users. Our financial
position continues on a steady path of improvement and optimisation and, as
mentioned, places the group well to navigate the prevailing volatility.
We have made meaningful progress in strengthening our financial position and
maintaining a healthy liquidity position. As announced in our trading statement dated
31 July 2020, in order to sustain this progress, and in line with our capital allocation
framework, the board has decided not to declare a 2020 interim dividend (2019:
195cps) in the context of the COVID-19 impacts and the material uncertainties these
present. Should conditions warrant a final dividend, this would be no more than 390
cents per share, aligned to the current dividend policy. The key factors to consider
will include the general macro-economic environment, the status of cash
upstreaming from operating companies and the outlook for the holding company
Prospects and guidance
Well positioned to deliver growth
The global COVID-19 pandemic has brought about significant volatility and
uncertainty across our markets, placing unprecedented pressure on the various
economies and affecting the daily lives of our people, customers and other
The operational performance of our portfolio in H1 has demonstrated the resilience
and agility of the MTN business model, as well as our operations’ ability to sustain
growth in challenging circumstances as our products and services are fundamental
to the people and economies of our markets. This lies at the heart of MTN’s digital
operator strategy. While we expect the remainder of the year to be shaped by the
ongoing challenges presented by the pandemic, we believe that MTN will remain
comparatively resilient in the current environment and is well-placed to sustain its
growth over the medium-term.
As we weather the prevailing storm, focusing on managing the risks brought about
by COVID-19, through strict cost-control measures and enhanced oversight of
expenditure, we are also alive to the opportunities the pandemic has presented,
particularly the accelerated need for digitisation. This was embodied in the strong H1
performance of our data, digital and fintech growth curves as the impacts of COVID-
19 took hold.
As we continue building a digital operator, we are well-positioned to further unlock
this opportunity over time, on the foundation of our strong position in high-growth
markets where the populations are youthful and fast-growing. The opportunity to
increase the adoption and usage of our data, digital and fintech services over the
medium to long-term remains substantial.
We are pleased with the turnaround in the core consumer and enterprise businesses
in MTN SA against a challenging macro environment. Whilst COVID-19 impacts will
present ongoing headwinds in the second half of the year we are pleased with the
work done to build the operational resilience of MTN SA and believe it is well-
positioned to navigate the volatility.
In Nigeria, we will continue to invest in our network and ramp up the rollout of 4G,
which was slowed down by the impact of COVID-19 during H1. The increased
adoption and growth in usage of data remains a key priority to drive further data
revenue growth. We remain committed to expanding our fintech and digital service
offerings, as we continue to expand our MoMo agent network with the conversion of
our existing airtime agents into MoMo agents and broaden our service offerings. We
remain on track to achieve our agent network target of 300,000 by year-end.
We will further strengthen and grow our digital offerings. The work is ongoing to scale
Ayoba and build on the progress already achieved in increasing conversion and
retention rates, as well as engagement on the channel which is gaining some traction.
In the broader digital business, advancements continue in broadening the
accessibility of services for our customers and stimulating increased engagement.
We remain committed to delivering on our guidance framework over the medium-
term (3 to 5 years), although, as mentioned, we expect the remainder of the year to
be challenging. Within this context, we maintain our medium-term target of double-
digit growth in group service revenue in constant currency terms; double-digit
growth in MTN Nigeria’s service revenue and mid-single-digit growth in service
revenue from MTN South Africa.
We expect to continue to improve our group EBITDA margin through the execution of
our group efficiency programme and to deliver on our ROE target.
By leveraging historical investments, improved procurement processes and an
increasing revenue contribution from our digital businesses, we expect the group
capex intensity to improve steadily over the medium term on an IFRS reported basis.
We aim to secure at least a further R25 billion in asset realisations over the medium-
term. This is within the context of our localisation ambitions, MTN’s portfolio of assets
that have been identified as not long-term strategic and market conditions being
conducive. Our holdco leverage ratio target over the medium-term is ‘below 2,0x’ and
we remain focused on delivering on our capital allocation priorities.
We have made meaningful progress in strengthening our financial position, and we
maintain a healthy liquidity position. As mentioned, in order to sustain this,
particularly in context of COVID-19 impacts and the material uncertainty these
present, the board has decided not to declare a 2020 interim dividend. Should
conditions warrant a final dividend, this would be no more than 390c per share,
aligned to the current dividend policy.
In light of the ongoing assessment of our networks and the disruptions in supply
chain and challenges in rolling out coverage in the current COVID-19 environment,
we revise our guidance for capex in 2020 to at least R24,0 billion – this is up from the
guidance of R22,0 billion provided in our Q1 2020 trading update.
For and on behalf of the board,
MH Jonas RA Shuter RT Mupita
Group chairman Group president and CEO Group CFO
5 August 2020
Date of release 6 August 2020
Tamela Holdings Proprietary Limited
JP Morgan Equities South Africa Proprietary Limited
Date: 06-08-2020 07:05:00
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