BUSINESS MAVERICK: Annual results: MTN ditches dividend in favour of debt reduction

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Despite a strong operational and financial performance, the network operator isn’t paying a dividend after Covid-19 held up transactions that would have helped it reduce its gearing.

MTN has removed the shine from a strong set of annual results by suspending its final dividend payment – after also withholding an interim dividend. While Covid-19 uncertainty played a part in its decision, it has also battled to repatriate dividends from Nigeria, its biggest operation, and is still waiting for the proceeds from businesses it has sold as part of its ambitious plan to raise R25-billion over the next few years.

“The board has decided to suspend the dividends in light of some uncertainties that we face, particularly around cash upstreaming, but, more importantly, our desire to deleverage the balance sheet faster,” CEO Ralph Mupita said in a presentation to investors. “The market is eagerly awaiting some of these deals to realise as it can unlock significant value in the business and reduce the debt burden of the business.

Despite challenging trading conditions, Mupita said the group added 28.8 million more subscribers last year, taking its total subscriber base to almost 280 million. It added 19 million active data users and 11.7 million MoMo users, while the number of active merchants accepting its MoMo propositions more than doubled to 440,000.

“The results were operationally sound with most operating metrics moving in the right direction,” Engelbrecht said.

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