Shareholders happy with results, but unhappy with electronic voting innovation
Scancom Plc, operator of the MTN Ghana mobile telecoms network, the country’s largest, held its first Annual General Meeting in Accra yesterday, since going public mid last year in what was far and away the largest ever Initial Public Offer ever done on the Ghana Stock Exchange, and which created the third most capitalized company on the nation’s stock market at GHc9.7 billion by the end of 2018.
While the positive financial performance of the company for 2018 was never in doubt, the AGM had generated deep interest by corporate Ghana watchers who were eager to see how the company would handle the unprecedented number of indigenous retail investors expected at the event; last year’s IPO created by far the largest number of Ghanaian retail shareholders in any corporation in Ghana at127,826. Impressively, the AGM went off without a hitch except for problems encountered by the company’s attempt to use electronic voting by shareholders to pass key resolutions, which forced it to resort to the customary ‘show of hands’ by shareholders to ascertain their wishes, midway through the presentation of resolutions.
For the 2018 financial year, MTN Ghana’s profit before tax rose to GHc1.6 billion, up 16.5 percent on 2017, this translating to earnings per share of GHc0.067 per share. The Board approved a generous dividend payout ratio of 81.2 percent, this translating to a total dividend payout of five pesewas per share, comprising an interim dividend of two pesewas per share and a final dividend of three pesewas per share.
MTN Ghana’s record profits were derived from a 23.5 percent increase in service revenues, which accounted for 99.4 percent of total revenues. This was driven primarily by a 30.2 percent increase in data revenues, which accounted for 26.1 percent of total revenues, and a 34.6 percent increase in digital revenues (including mobile money) which accounted for 24.8 percent of total revenues.
The company’s strong growth was propelled by heavy capital expenditure which amounted to GHc825 million in 2018 most of which was spent on rolling out 600 new 2G sites, 1,100 3G sites and 250 4G sites, along with the acquisition of assets of Goldkey Limited, including its spectrum in the 2,600 MHz band which has enabled the introduction of industry leading 4G+ data services. Instructively, this has given the company a 59.9 percent data market share, which beats its 49.1 percent market share for voice telephony. Just as importantly, during 2018, mobile money (MoMo) subscribers increased by 17.8 percent to 13.6 million, giving MTN a dominant market share of over 90 percent in that market.
However some shareholders who attended the AGM expressed disappointment that this has not translated into similarly strong share price growth on the GSE. Indeed, after being listed, the share price climbed to GHc0.93, but then fell back to GHc0.79, thus translating to a 5.33 percent share price gain over the GHc0.75 at which the shares were listed in the first place. Indeed, the share price has fallen further to barely GHc0.70 since the beginning of 2019.
However the company’s chairman, Ishmael Yamson has dismissed calls for share buy-backs in order to push the share price higher, pointing out that MTN has been a victim of a bear market that has afflicted the entire GSE over the past year, resulting from a combination of rising yields on fixed income securities, cedi depreciation ( which has persuaded foreign equity investors to sell their holdings to prevent further foreign exchange losses) and the general lack of confidence in financial ,instruments due to the meltdown in both the banking and non-bank financial intermediation sectors. Indeed, MTN has significantly out-performed the GSE’s composite index – which tracks the weighted average change in share prices of all the listed stocks – since it began trading in early September.
The other cause for dissatisfaction at yesterday’s AGM was the flawed attempt to introduce electronic voting by shareholders to pass resolutions to declare dividends, re-elect retiring directors, approve directors renumerations for 2019 and authorize the fixing of auditors renumeration for 2019. While the effort to replace the unscientific (and quantitatively inaccurate) method of ‘show of hands’ by shareholders with voting by mobile phones, was a step in the right direction, many shareholders clearly could not keep up with the requisite process and MTN was forced to revert to the traditional method half way through the voting on the resolutions.
However shareholders were clearly impressed with MTN’s prospects going forward. Instructively for instance, about half of the network’s registered subscribers for both data and for mobile money services are not active; getting them to be active would dramatically increase both revenues and profits even with the current registered customer base.
“In line with our strategy we continue to drive down our operational cost while investing in capital expenditure to optimize network performance,” the company’s CEO, Selorm Adadevoh told the gathered shareholders. “We acknowledge that we are at the edge of a digital era in which many organizations are looking to harness emerging technologies and partnerships to drive business transformation and growth. We will however continue to grow voice as we increase coverage and penetration through rural expansion initiatives.”
By Toma Imirhe
