MTN Uganda half year revenue lifted by digital growth – and constant currency reporting

Uganda’s largest telecom MTN Uganda benefitted from a reduction in commissions paid to its mobile money agents in the first six months of this year, with an acceleration in income from digital streams driving revenue growth.

MTN Uganda said on Wednesday that revenue increased by 8.2% year on year at constant currencies to ZAR2,440m (equivalent to Shs687.9bn at the end of the reporting period) in the six months ended June 2018, led by an increase in digital revenue of 19.7% year on year at constant currency.

Those figures, however, ignore the effects of currency movements during the period. If exchange rate fluctuations are taken into consideration, MTN Uganda’s revenue in the period actually declined by 2.6% year on year to ZAR2,440m from ZAR2,506m in 2017 (restated to comply with changes in accounting policies).

The South African rand – the currency in which the Johannesburg-listed MTN Group reports its earnings – strengthened by 2.4% against the Ugandan shilling between June 2017 and June 2018.

Given that the results are reported using the rands closing rate, MTN Uganda’s revenue for the period ended June 2018 is equivalent to Shs687.9bn compared to Shs689.7bn for the six months ended June 2017.

This means that converted to Ugandan shillings, MTN Uganda’s revenue declined slightly by 0.26% year on year in the half year ended June 2018.

Massaged numbers or not, MTN Uganda reported increases in revenue from digital and data services. Digital revenue increased by 7.7% year on year (or 19.7% in constant currencies) to ZAR684m in the first half of this year, while data revenue went up by 6.1% year on year (17.8% in constant currencies) to ZAR226m.

The two income segments contributed 37.2% to total revenue in the six months ended June, up from 33.8% in the same period last year. The digital segment includes mobile money, MoKash, MTN Play, MTN Music, and MTN football.

MTN attributed the rise in digital revenue to a growth in income from mobile money which “exceeded expectations” and was supported by a reduction in commissions paid to mobile money agents. It said active mobile money and data subscribers grew to 5.3 million and 1.8 million, respectively.

The two product lines were the only profitable segments for MTN Uganda in the reporting period compared to a year earlier. Income from outgoing voice calls, which was 52% of total revenue down from 54.3% in the first half of 2017, declined by 6.9%. Incoming voice revenue also fell 4.1%, while SMS and devices revenue reduced by 10% and 39.4% respectively.

Total subscribers, on the other hand, increased marginally by 0.2 million between June 2017 and June 2018. They fell by a similar number between December 2017 and June 2018, something MTN said was caused by “the regulator’s ban on the sale and replacement of SIM cards between March and May 2018.”