Performance: Exceeds expectation

• EPS grew by 30.8% y/y and 62.6% q/q to GHS 0.11 which exceeded our estimate by 14.4%
• Revenue was the key variation as the top line came in 9.8% better than we anticipated. The figure for the period was GHS 5.6bn which was an increase of 24.9% y/y and 53.6% q/q
• According to management, increased active subscribers for both data and mobile money, higher P2P transactional activity, and a 52.2% y/y increase in total data consumed accounted for the good growth in revenue
• EBITDA rose by 27.5% y/y to GHS 3bn, resulting in a 112bp y/y expansion in the EBITDA margin
• ROaE improved by 174bp y/y to 51.8% which compares favorably to the average cost of equity of 27%

Outlook: Strong growth momentum despite slight regulatory concerns

• We remain impressed by MTNGH’s earnings momentum and while we are slightly concerned about regulatory disruptions, we are confident that recent directives will not significantly upset growth
• As we expected, the implementation of phase 1 of the on-net/off-net price differential removal from 1 August 2021 was not material and we do not expect phase 2 to have any significant impact as well
• The directives we are most concerned about are the ones that attempt to regulate MTNGH’s pricing across voice, data, and mobile money. At the moment, there is not enough guidance from the regulator on how it intends to implement them and as such we are unable to quantify the impact on earnings
• The above notwithstanding, we can clearly see the long-term opportunity in mobile money. In our opinion, the shift to digital transactions is a secular transition that will continue to gather momentum. At the fore of this transformation is MTNGH. The company is leveraging its mobile money ecosystem to create a digital distribution platform where we see significant opportunities across financial and non-financial services
• Consequently, in our opinion, regardless of the localization approach we see significant upside from current levels

Valuation: Not rated

• MTNGH is trading at an EV/EBITDA multiple of 3.8x