MTN Uganda adds subscribers and expands its network, but margins come under pressure

MTN Uganda recorded an 8.5% increase in revenue to Ush 2.88 trillion in the nine months to September 2026, with its data and fintech businesses accounting for the bulk of growth, even as higher operating costs and currency depreciation weighed on its financial performance.

The telecommunications operator reported service revenue of Ush 2.84 trillion for the period, up 8.5% from the corresponding period last year. Its subscriber base also expanded by 12.5% to 26.4 million, giving it a 63.4% share of Uganda’s telecommunications market.

Data and mobile financial services were the company’s strongest growth drivers, contributing 86% to the growth in service revenue and representing 62% of total service revenue.

Data revenue rose 12.8% to Ush 860.6 billion, supported by a 31.9% increase in data traffic. Active data subscribers grew 14.3% to 12.6 million, reflecting continued demand for internet services.

The fintech business also delivered solid growth, with revenue increasing 11.6% to Ush 902.8 billion. Mobile money transaction value climbed 18.3% to Ush 166.6 trillion, while the number of active fintech subscribers reached 15.5 million, an 8.6% increase. MTN Uganda’s merchant network more than doubled to 202,800.

Voice services recorded more modest growth, with revenue rising 1.6% to Ush 964.1 billion, partly affected by changes to the Mobile Termination Rate.

Despite the overall growth, MTN Uganda faced pressure on its data business during the third quarter. Data revenue growth slowed to 7.8%, compared with 17.5% in the second quarter, following increased competition from unauthorised public Wi-Fi resellers offering unlimited internet packages through business fibre and fixed wireless connections.

The company said regulatory enforcement against the unauthorised resellers began in October.

MTN Uganda Chief Executive Officer Sylvia Mulinge also pointed to higher fuel, food and transport costs, as well as the depreciation of the Ugandan shilling, as factors affecting the business. The currency weakened by 7% during the third quarter and 8.3% since the beginning of 2026.

The cost pressures were reflected in the company’s operating expenses, which increased 14.6% during the nine-month period. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by a slower 3% to Ush 1.47 trillion, while the EBITDA margin declined by 2.8 percentage points to 51.1%.

MTN Uganda’s profit after tax increased 21.2% to Ush 571.2 billion. However, the improvement was largely influenced by a Ush 111 billion tax settlement recorded in the same period last year. Excluding that one-off item, profit after tax would have declined by 1.9%. In the third quarter alone, net profit fell 0.2% to Ush 203.8 billion.

The company continued to invest in its telecommunications infrastructure, increasing capital expenditure, excluding leases, by 32.6% to Ush 397.7 billion. The investment financed the deployment of 255 new network sites, expanded its fibre network to more than 40,000 kilometres and increased 5G population coverage to 25.6%. Its 4G network now covers 94% of the population.

MTN Uganda also extended its partnership with Starlink, a satellite internet provider under the MTN Group arrangement, into the local market and introduced MTN TV by AfroMobile as part of its broader digital services offering.

However, the higher investment came alongside weaker cash generation. Net cash from operating activities declined 10.2%, while cash and cash equivalents dropped to Ush 163.6 billion from Ush 383.3 billion a year earlier. Its net debt-to-EBITDA ratio also increased to 0.9 times, compared with 0.7 times at the end of 2025.

On shareholder returns, the board declared an interim third-quarter dividend of Ush 4 per share, amounting to Ush 89.6 billion. The payout was lower than those made in previous quarters, with the company citing the need to align dividends with near-term cash generation.

The total dividends declared for the nine months were Ush 21.25 per share, up 3.7% and a payout ratio of 83.3%. The dividend book closure date is 1 December 2026, with payment scheduled for 18 December 2026.

MTN Uganda sees its full-year 2026 service revenue growth broadly in line with the 8.5% growth in the first nine months, below its medium-term guidance. The company also anticipates an EBITDA margin of around 50% for the full year.

The outlook is indicative of a tougher economic environment with the Bank of Uganda raising its Central Bank Rate by 225 basis points to 12% and lowering its FY2026/27 economic growth forecast to 6% to 6.5%.

Meanwhile, regulatory review continues on plans to structurally separate MTN Uganda’s fintech business, with the proposed changes to its financial services operations awaiting approval.

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