Telecommunications giant MTN has chosen to cut back on its capital spending in the first half of 2023, with a focus on safeguarding its profit position. This decision was motivated by the need to adapt to rising investment requirements. While MTN did not explicitly explain the reduction, details revealed a decline of Shs50 billion in capital expenditure (Capex) during this period, excluding rights-of-use assets. This decrease in Capex led to an increase in capital intensity from 18.4 percent to 15.9 percent, ultimately bolstering profits from Shs193.56 billion in the same period last year to Shs228 billion.
MTN, in its report to June, stated, “We continue to maintain stable EBITDA (earnings before interest, taxes, depreciation, and amortization) margins above 50 percent and expect Capex intensity to remain in our target range of mid-teens (between 13 and 19 percent).”
The notable increase in profits was largely driven by revenues from voice services, data, financial technologies, and inbound data roaming. Other contributing factors included short text messages, unstructured supplementary service data (USSD), and devices. These factors led to a 17.8 percent rise in investor earnings per share from Shs8.6 to Shs10.2.
MTN maintained a Capex of Shs201.7 billion, with a specific focus on 4G and 5G network requirements. With higher revenues, the Capex intensity declined by 2.5 percentage points to 15.9 percent, and MTN expects this to remain within the targeted midterm range as they continue deploying their commitments throughout the year.
MTN, one of Uganda’s most valuable companies with a market capitalization of Shs3.81 trillion, has been heavily investing in technology, particularly data services, to create alternative revenue streams as income from voice services has declined in recent years. Despite substantial growth in data services, the revenues generated were not sufficient to offset the capital-intensive nature of the sector.
In addition to the reduced capital spending, MTN has shown a commitment to invest in projects aimed at incorporating women entrepreneurs into their capital expenses, particularly in technology. These initiatives are being carried out in collaboration with Outbox, NSSF, Private Sector Foundation Uganda, Innovation Hub, and American Tower Corporation. MTN has allocated Shs15.03 billion to expand the number of women-owned businesses on its operational scale, primarily focusing on small and medium-sized businesses with annual incomes of Shs60 million.
The government and corporate organizations believe that achieving accelerated socioeconomic transformation must be supported by gender parity in finance and technology, both of which are currently driving economic growth.
