Performance: Data revenue drives growth

• EPS grew 43.5% y/y to GHS 0.16 driven mainly by a strong growth in data and mobile money revenue
• The top line closed the year at GHS 7.7bn which was 14.3% higher than our estimate
• Data revenue accounted for 36.0% (+640bp y/y) of top line growth while mobile money increased to 22.5% (+160bp y/y) of total service revenue
• EBITDA margin expanded by 234bp y/y to 55.0% on the back of a 33.7% y/y growth in EBITDA to GHS 4.2bn.
• Consequently, margin growth was 218bp better than our estimate

Outlook: Positive growth momentum but regulatory concerns linger

• We remain impressed by MTN Ghana’s earnings momentum as the company continues to exceed our best-case scenarios despite significant regulatory disruptions.
• We are even more impressed by the growth in data revenue which has exceeded our expectations and lends support to our thesis that, consumer usage behaviour will tilt from voice to data over the medium term.
• In effect, we are pleased to see this thesis evolve and therefore maintain our view that the network with the widest coverage and the best service quality will dominate the space.
• Consequently, we are delighted to see MTN Ghana’s CAPEX intensity increase by about 500bp to 19.5% with a significant chunk skewed towards data infrastructure.
• We are also glad to see a lot more clarity on the localisation of Scancom PLC and MobileMoney Limited. However, we are concerned about the impact which the yet-to-be introduced e-Levy will have on mobile money growth.
• According to management, P2P transaction fees will be reduced by 25% upon the implementation of the e-levy. While this may help reduce transaction costs for subscribers, we are uncertain if it will be significant enough to support transaction volumes.
• Furthermore, although we are glad to hear that, three out of the six regulatory directives arising from the Significant Market Power status have been implemented without any significant impact to growth, we remain concerned about the directive which seeks to insert a price floor/ceiling on voice, data, SMS and mobile money. This directive is yet to be implemented and, in our opinion, may carry the most risk to top line growth.
• Despite all the regulatory concerns, we are of the view that there are several options MTN Ghana could utilise to mitigate the potential shortfall in revenue. The monetisation of the push and pull (i.e. transfers from bank to wallet and vice versa) remains one source for augmenting mobile money revenue, while the continuous change in consumer behaviour and increased smartphone usage could see data revenue lend more support to total service revenue.
• In our opinion, earnings visibility is slightly clouded but we are of the view that this is temporary and as such maintain a very optimistic view of MTN Ghana’s medium-term growth outlook

Valuation: Not rated 

• MTN Ghana is trading at an EV/EBITDA multiple of 2.9x

Dividend announcement 

• Final dividend = GHS 0.085 per share (this translates to a total dividend of GHS 0.12 per share for the FY2021 financial year)
• Ex-dividend = 11 May 2022
• Qualifying date = 13 May 2022
• Dividend payment date = 16 June 2022