By Dineo Faku Mar 11, 2021
JOHANNESBURG - AFRICA’S biggest mobile operator MTN yesterday suspended its dividend and dividend policy for 2020 to focus on debt reduction as it announced that it had added 29 million customers during the year ended in December.
MTN said it had decided not to pay dividends in 2020 after the cash repatriation challenges in Nigeria, the delayed asset disposal programme due to tough market conditions and the impact of the Covid-19 pandemic resulted in the 2.2x leverage ratio for the year, which was higher than the group’s preferred limits.
The group said it expected to inform the market of a revised medium-term dividend policy when the group announces its 2021 results in March 2022.
MTN president and chief executive Ralph Mupita said that the board anticipated paying a total ordinary dividend of at least 260 cents a share for the 2021 financial year. “We anticipate that this will be a final dividend, with no interim dividend for the 2021 financial year,” Mupita said.
He added that on assessment of the progress of upstreaming cash from Nigeria, the delivery of the asset disposal programme and Covid-19 impacts, the board would consider returning further cash to shareholders in the form of special dividends or share buybacks after the release of the 2021 financial year results. He said that MTN was focused on deleveraging the holding company after reducing net debt by R12 billion to R43bn.
Cape Town-based Mergence Investment Managers Peter Takaendesa said MTN joined Telkom, leaving only Vodacom as the only listed major telecoms company that still paid dividends. “We are confident that both MTN and Telkom will resume paying dividends over the next 12 to18 months, as the planned asset disposals for both should help unlock value as well as further strengthen their balance sheets.
“The key mid-term challenge for MTN will remain upstreaming cash from Nigeria as well as staying on top of regulatory challenges in its key West Africa operations – hopefully the recovery in the oil price will last and ease some of these challenges,” Takaendesa said.
MTN yesterday posted a strong operational performance in 2020 adding more subscribers to reach a total of 280 million across 21 markets.
The group more than doubled its operating cashflow to R28.3bn, and reported a 52 percent increase in adjusted headline earnings per share.
Group service revenue increased 11.9 percent to R170.1bn from R141.8bn a year earlier, led by a 14.6 percent growth in MTN Nigeria, 1.6 percent in MTN SA, and 16.6 percent in MTN Ghana.
Data revenue expanded by 31 percent, with a 110 percent increase in traffic brought about by higher levels of online demand resulting from the effects of Covid-19, including an increase in the learn-from-home and work-from-home trend.
Fintech revenue rose by 23.9percent and the number of active Mobile Money users increased by 11.7 million to 46.4 million.
MTN also announced its re-positioned strategy – Ambition 2025 – to accelerate growth and unlock the value of its infrastructure assets and platforms following the review of its strategy in the fourth quarter of 2020.
“As part of this strategic repositioning, we are looking to structurally separate our infrastructure assets and platforms, such as fintech, to reveal value and attract third-party capital and partnerships into these businesses, over the medium-term,” Mupita said.