Technology company, MTN Uganda, has reported a 21.2% increase in profit after tax to Shs 571.2 billion for the nine months to September 30, largely because it did not have to meet a tax settlement recorded during the same period last year.
The company also recorded an 8.5% increase in service revenue to Sh2.8 trillion, supported by growth in its customer base and rising demand for internet and mobile financial services.
However, the results show that higher revenue has not translated into similar growth in operating earnings, as the company faces rising costs and increased competition in the data market.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 3% to Shs 1.5 trillion. Its EBITDA margin, which measures operating profitability, fell to 51.1% from 53.9% a year earlier.
MTN's subscriber numbers increased by 12.5% to 26.4 million, giving the company a larger market for its technology and financial services.
Data revenue grew by 12.8% to Shs 860.6 billion during the nine months. But growth slowed to 7.8% in the third quarter, compared with 17.5% in the second quarter.
This happened despite a 31.9% increase in data traffic, suggesting that customers are using more internet services without generating a similar increase in revenue for the company.
MTN said unauthorised public Wi-Fi resellers were contributing to the pressure. Some operators offer unlimited internet packages using business fibre and fixed wireless connections, creating additional competition.
While data revenue also increased, unauthorised public Wi-Fi resale is limiting our ability to translate this growing demand into revenue growth
MTN Uganda CEO Sylvia Mulinge
The company said this was making it harder to earn revenue from growing data consumption. However, registrations for its home broadband services increased by 58.9% during the period.
Its mobile financial services business also continued to grow. Revenue from fintech services increased by 11.6% to Shs 902.8 billion, with growth reaching 13.3% in the third quarter.
The MoMo application, which allows customers to access mobile money services, had more than 832,000 customers.
The company is also operating in an environment of rising fuel, food and transport costs, as well as pressure from foreign exchange movements. These factors have increased the cost of doing business.
Expanding network coverage
MTN Uganda invested Shs 397.7 billion in capital expenditure, excluding leases, during the nine months.
The investment supported the construction of 255 new network sites and extended the company's fibre network to more than 40,000 kilometres.
The company said 4G population coverage had reached 94%, while 5G coverage increased to 25.6%.
The investment is intended to improve network quality and accommodate growing demand for internet services as more Ugandans use digital platforms for communication, business and financial transactions.
Commenting on the results, Sylvia Mulinge, Chief Executive Officer of MTN Uganda, said:
“The nine-month performance reflects both the resilience of our business and the pressures facing the industry. Demand for data continues to grow, with customers using more data and more people connecting to our network. While data revenue also increased, unauthorised public Wi-Fi resale is limiting our ability to translate this growing demand into revenue growth. We also continue to see encouraging momentum in fintech.
“We are responding through continued investment in our network, innovation in our digital services and a stronger focus on operational efficiency. We also recognise the importance of a sustainable and competitive telecommunications environment that supports continued investment in the country’s digital infrastructure.”
Plans for the coming months
MTN Uganda says it will focus on improving revenue growth, increasing the use of its services and controlling operating costs.
In its telecommunications business, the company plans to improve network quality, expand home broadband and introduce more customer-focused offers through its digital channels.
It also expects its partnership with MTN Group and Starlink to help extend internet connectivity to businesses in areas where building conventional network infrastructure is difficult.
In financial services, the company plans to encourage more customers to use its MoMo application for everyday transactions.
These include payments on the Entebbe Expressway and travel bookings through Travel by MoMo. The company also plans to expand its network of mobile money agents and merchants to support wider use of cashless payments.
MTN Uganda expects cost controls and operational efficiencies to help maintain an EBITDA margin of about 50% for the full year.
The company says its focus will be on balancing further investment in network infrastructure with profitability and long-term growth.
