In brief
- Topline and Earnings Momentum Anchored by Data and Fintech Growth: MTNGH delivered a robust 1H2025 performance, with profit-after-tax rising 55.8% y/y and service revenue up 40.0% y/y. Growth was broad-based, led by data (+50.8%) and mobile money (+46.4%), with digital services rebounding sharply (+87.7%) amid subscriber gains. These trends reflect solid commercial execution and growing monetisation across core segments.
- Margin Resilience Supported by Macroeconomic Tailwinds and Cost Discipline: The company maintained a healthy EBITDA margin of 58.4%, up 227bps y/y, as cost pressures eased with the appreciation of the Cedi and declining inflation. Improved cost control and stable FX conditions enabled earnings leverage, even as network investments remained elevated.
- Strategic Market Position Reinforced by Platform Strength and Competitive Pricing: We believe MTNGH’s dominant market share and near-universal 4G coverage continue to offer a strong competitive edge. In our opinion, the recent 15% reduction in data prices boosts subscriber acquisition potential, while fintech and digital platforms create structural revenue upside. Despite regulatory constraints, the company remains well-positioned to compound earnings over the medium term.
- Interim Dividend Highlights Earnings Confidence and Capital Discipline: We view the GHS 0.08 interim dividend as a clear signal of management’s confidence in MTNGH’s earnings resilience and cash generation. In our view, the company’s strong free cash flow and disciplined capital allocation position it to sustain shareholder payouts, absent major regulatory disruptions.
1H2025 Earnings Update
Scancom PLC (MTNGH) published its 1H2025 results on 01 August 2025, delivering a strong performance across all key metrics. Profit-after-tax rose by 55.8% y/y to GHS 3.6bn, supporting an interim dividend of GHS 0.08 per share. Service revenue increased by 40.0% y/y to GHS 11.3bn, driven by broad-based growth across connectivity and fintech segments. Data revenue rose 50.8% y/y, while MoMo expanded by 46.4% y/y and now accounts for 25.1% of service revenue. Digital services rebounded strongly, rising 87.7% y/y to GHS 190.3mn following product sanitisation efforts. This rebound was supported by a 21.9% y/y increase in active digital subscribers to 5.7 million, alongside the addition of over 1.8 million new users through subscriber acquisition initiatives. Total costs rose by 32.5% y/y to GHS 4.7bn, reflecting elevated inflation and cedi depreciation in 1Q2025. Operating expenses grew 40.7% y/y to GHS 2.8bn, driven by higher spending on rent, utilities, tower operations, maintenance, and management fees. Despite cost pressures, EBITDA expanded by 45.5% y/y to GHS 6.6bn, with margin improving to 58.4%, supported by improved cost discipline and easing inflation in 1H2025. Capital investment remained elevated. Ex-lease capex was GHS 2.3bn, with total capex reaching GHS 2.7bn, focused on continued upgrades to network infrastructure. This included both new deployments and replacement of transmission equipment, sustaining 99.3% 4G population coverage. These investments underpinned strong data usage trends, with average consumption rising to 14.0GB per user per month and total data traffic increasing by 56.1% y/y. The network improvements enhanced service quality and positioned the company to meet growing demand for high-speed connectivity. Overall, the results reflect disciplined execution, margin resilience, and strategic reinvestment. However, sustaining growth will depend on translating subscriber and usage gains into durable ARPU expansion while managing the high intensity of ongoing capital investment.
Near-term Outlook: Clear Run Ahead as Margin Strength and Revenue Momentum Support 2H2025 Outlook
- We believe MTN Ghana is well-positioned to benefit from the improving macroeconomic environment. Inflation fell sharply to 13.7% in June 2025, the lowest level since December 2021. The 1H2025 average inflation of 20.4% reflects six straight months of disinflation, reinforcing our view that pricing pressures are easing. We also note the significant appreciation of the Cedi, which strengthened from GHS 15.3/USD in January to GHS 10.3/USD in June, based on Bank of Ghana interbank rates. As economic activity picks up and real incomes stabilize, we anticipate continued momentum in both data and mobile money revenue. In our view, management’s full-year guidance of mid-to-upper 30s revenue growth remains realistic, supported by strong network fundamentals, accelerating digital adoption, and growing monetisation across the fintech ecosystem.
- We believe the recent appreciation of the Cedi offers immediate relief on cost pressures, particularly for foreign currency-denominated expenses such as management fees and tower lease payments. When combined with falling inflation and declining interest rates, we see greater scope for disciplined cost management. In 1H2025, EBITDA margin expanded by 227bps to 58.4%, and we expect further upside in the near term as input cost pressures ease. In our view, MTNGH remains on track to achieve a mid-to-high 50s EBITDA margin for FY2025, consistent with management guidance. We also believe moderating inflation will support tighter control of operating expenses, helping to protect earnings quality even as the company continues to invest heavily in network infrastructure.
- We believe MTNGH remains competitively well-positioned, supported by its dominant market share, accelerating fintech monetisation, and strong platform advantage. The recent 15% reduction in data prices, introduced following engagement with the Ministry of Communications and other regulators, enhances the company’s pricing appeal. In our view, this move strengthens MTNGH’s ability to attract subscribers from competing networks, especially as it continues to leverage its superior service quality and near-universal 4G coverage. While regulatory oversight under its SMP designation presents a constraint, we believe the company is navigating these obligations responsibly. Looking ahead, we expect earnings to continue compounding at a healthy pace, with a projected CAGR of 46.2% over the next five years. We also see potential valuation upside, supported by disciplined execution, network scale, and improving shareholder returns.
Dividend Payout Reinforces Earnings Confidence
- We believe the declaration of a GHS 0.08 interim dividend signals management’s confidence in the strength and sustainability of MTNGH’s earnings. The payout reflects solid cash generation and disciplined capital allocation, even amid elevated investment in network infrastructure. In our view, the continued improvement in margins and topline momentum provides room for further shareholder distributions. Barring any material regulatory headwinds, we expect full-year dividend payments to remain consistent with recent trends, supported by a strong balance sheet and resilient free cash flow.
Key risks
- In our view, MTNGH’s dominant market position, strong earnings profile, and consistent cash generation support a solid valuation. However, we believe key risks to our outlook include regulatory overhang from its Significant Market Power (SMP) status, pricing interventions such as mandated data tariff cuts, and uncertainty around the MobileMoney Ltd. (MML) separation. We also see downside risk if data revenue growth underdelivers or if digital services scale more slowly than anticipated.
Valuation: BUY
- Our BUY rating is based on our weighted average fair value of GHS 4.45 per share, implying a 24.6% upside. This is derived from a blend of valuation methodologies which are the dividend discount model (DDM), free cash flow to firm (FCFF), and comparable multiples (P/B and EV/EBITDA). Our rating reflects the near-term upside and our constructive medium-term view, which is underpinned by strong fundamentals, strategic execution, and earnings momentum.
- MTNGH is trading at a TTM P/E of 7.5x and P/B of 4.3x. Given the company’s strong growth trajectory and our forward estimates, we believe the market is underpricing MTNGH’s earnings potential.