Last week, MTN Ghana, adjudged by the Ghana Investment Centre as the country’s leading corporation, held its 2nd Annual General Meeting since becoming a publicly listed company, in virtual form. To be sure, as the company at the cutting edge of Ghana’s digital revolution, MTN is better positioned than any other company to organize and host seamless virtual events using digital technology. But it was still a pity that its directors were unable to see physically the broad smiles on the faces of thousands of shareholders as they unveiled the company’s financial performance results for 2019; the underlying growth in customer base and the intensity with which they use its unique, innovative products and services; as well as the accelerating rate of diversification which is transforming MTN into the first ever full range mobile digital services provider.
This ultimately generated a 33.7 percent increase in pre- tax profits for 2019 to GHc1,443.374 million, up from GHc1,079.194 million in the previous year. Similarly profits after tax rose by 33.6 percent from GHc754.676 million in 2018 to GHc1,007.958 million last year.
But most instructive was the phenomenal increase in earnings before interest, tax, depreciation and amortization (EBITDA) to GHc2,630.433 million in 2019. This illustrates the strong growth of the underlying business volumes being generated by MTN, derived from both the expansion of the customer base and the intensity with which that growing number of customers use its products and services.
Last year, MTN Ghana’s service revenues grew by 22.8 percent, underpinned by revenue growth from voice, data and Mobile Money (MoMo) alike. Instructively, MTN maintains its market share dominance across all three market segments with an overall market share of 55.21 percent.
During 2019, the company’s subscriber grew by 12.3 percent to 22.6 million, of which 19.8 million were categorized as active. But even more instructively, this growth is being driven primarily by the relatively new segments; data subscribers increased by 28.6 percent to 20.1 million (with 8.1 million active) while MoMo subscribers increased by 10.6 percent to 15.1 million (of which 9.1 million were active).
But most important of all, revenues from every segment grew faster than their respective customer bases evidencing increasing use of MTN Ghana’s products and services by those customers. This illustrates just how useful, the company’s customers are finding the products and services on offer.
Voice telephony revenues grew by 19.4 percent in 2019, considerably faster than the 11.2 percent growth in active subscribers, this the result of better value propositions offered customers and further improvements in customer service as well as the sheer relevance, usefulness and customer convenience offered by the products and services on offer.
But revenues from the newer segments grew even faster. Date revenue climbed by 32.5 percent in 2019 on the back of a 26.6 percent growth in active data subscribers, an 18.5 percent increase in the number of smartphones in use on MTN’s network and most instructively of all, a massive 85.9 percent increase in data usage to 256,301 terabytes.
This was nearly matched by the 28.0 percent growth in revenue from MoMo where MTN has an overwhelmingly dominant 93 percent market share. This strong growth came on the back of an 8.9 percent growth in active subscribers, increased commissions on cash-in-cash-out transactions, increased transactional activity of person-to-person transactions as well as more use of advanced services such as retail merchant payments.
All this illustrates the increasing diversification of MTN’s revenue streams. In 2019, the contribution of voice telephony to total revenues declined from 46.3 percent to 45.0 percent. Conversely, data’s contribution to total revenue rose from 26.3 percent to 28.4 percent, while MoMo’s contribution expanded from 17.9 percent to 18.6 percent.
Underlying the unparalleled growth in both the number of customers and their use of MTN’s products and services is the company’s unmatched expenditure on its network. In2019 alone the company spent GHc1,112 million on infrastructure, up from GHc825.196 million in 2018. During 2019, the company rolled out 280 2G; 557 3G; 900 4G; and 100 rural telephony sites. By the end of 2019, MTN Ghana had GHc5,162.022 million in capital equipment being used to run its network. This was more than half of its total assets of GHc 9,958.650 million, which also included GHc3,405.579 million in Mobile Money float.
The sheer efficiency with which MTN runs its network and offers its unparalleled suite of products and services is applied in similar fashion to its operational processes and this has enabled the company to keep a tight lid on its running costs. Indeed, despite its significantly increased business volumes for 2019, the company was able to reduce its direct network operating costs to GHc624.043 million, down from GHc889.026 million in 2018.
The financial benefits of improved efficiency are shared largely between customers in the form of lower tariffs and better value propositions; and shareholders in the form of dividends that offer competitive yields on their investments.
But Ghanaian communities and the state’s treasury are major beneficiaries too. In 2019 alone, the MTN Ghana Foundation initiated eight new projects in education, three in health and one in economic empowerment.
These bring the total number of projects since the Foundation’s inception in 2007 to 149.
In 2019, MTN Ghana paid GHc363.247 million as income tax and another GHc72.169 million as National Fiscal Stabilization Levy. These were in addition to Communications Service Tax and Value Added Tax payments and a plethora of other fees and levies paid to both the central government and the various local governments where the company operates.
Declared MTN Ghana’s CEO, Selorm Adadevoh to shareholders at last week’s AGM, , “2019 marked the ‘Year of the customer’ for MTN Ghana and in 2020 we are building on that foundation as we transition from a traditional mobile telecommunications operator to an emerging digital operator. In line with our transition journey, MTN Ghana has declared 2020 as ‘Year of the customer: The Digital Experience ‘with a focus on digitalization as a tool to enhance customer experience as well as create value for our shareholders.”