MTN Group (MTNJ.J), Africa’s largest mobile operator by subscribers, resumed annual dividends on Wednesday, declaring a higher payout than previous guidance as a divestment plan progressed and the company reported higher profit.
MTN suspended dividends in March of last year to focus on debt reduction and because of uncertainty surrounding cash upstreaming from Nigeria, the timing of proceeds from its asset realisation program, and the impact of COVID. It also announced a new dividend policy, which will guide the market on a dividend amount each year based on its capital allocation priorities and market conditions, according to Mupita.
MTN expects to pay a minimum ordinary final dividend of 330 cents in fiscal year 2022 under its new policy.
By 0900 GMT, the stock was up 5.40 percent to 196.71 rand.
MTN, which has 273 million customers in 19 African and Middle Eastern countries, also provided new higher medium-term guidance, with group service revenue now projected at mid-teens percentage growth in constant currency terms, up from low-to-mid teens. It stated at the time that it planned to announce a revised medium-term dividend policy in March 2022 and that it expected to pay a total ordinary dividend of at least 260 cents per share in fiscal 2021.
“The board has looked at our cash balances, solvency and liquidity, as well as our investment profile for the year ahead, and has declared a dividend of 300 cents per share, which is 40 cents higher than our minimum,” Group Chief Executive Ralph Mupita said.
MTN Nigeria, the company’s largest revenue generator, is expected to grow.
Its financial results for the fiscal year ended Dec. 31 showed that group service revenue increased by 18.3 percent to 171.8 billion rand ($11 billion), exceeding its medium-term targets, owing to strong demand for data, digital, and financial services.
In its home market of South Africa, it increased headline earnings per share (HEPS) by 31.8 percent to 987 cents.
Due to cash received from its operating companies as well as proceeds from its divestment plan, the holding company’s net debt fell to 30.1 billion rand from 43.3 billion rand as a result of cash received from its operating companies and proceeds from its divestment plan.
