Q2 2026 MTN Uganda Ltd Earnings Call
Speaker #1: Good day to you all, and thank you for taking the time to join the Investor Call for the first half of 2026. We'll be discussing MTN Uganda's interim financial results for the six months ended 30 June 2026.
Speaker #1: My name is Amanda Bossa, the Chartered Investor Relations at MTN Uganda, and joining me on the call is Ms. Sylvia Mlinge, the Chief Executive of MTN.
Speaker #1: Mr. Andrew Bugembe, the Chief Financial Officer of MTN Uganda, and Mr. Faiz Ndega, the Managing Director of MTN Movambu Uganda. This call is scheduled for one hour, and we encourage you to submit your questions through the question tab on the screen, which we will be able to address after the prepared remarks.
Speaker #1: So, Sylvia, we'll start with an overview by sharing our operational performance for this period, and then we'll also have a financial overview by Mr. Mgembe.
Speaker #1: With that, please allow me to hand over to Sylvia. Thank you.
Speaker #2: Fantastic. Thank you, Amanda, and thank you to everyone who has made time to be with us on this call today. You are most welcome. I hope you have had time to go through our report that we released last week on Friday.
Speaker #2: You've interacted with it. We will seek to shed a bit more light and color in terms of the operational detail, and we'll provide you with an opportunity to interact with us and ask any questions or clarifications that you may have from the report that was shared.
Speaker #2: Before I get into the details of our performance for the first half of the year, I also want to take this opportunity to formally welcome Faiz Lubega to MTN Uganda.
Speaker #2: He is our new MD, and this is his first results call. For the time that he has had so far here at MTN Uganda, you're most welcome, Faiz.
Speaker #2: I'm sure our investors and shareholders will get an opportunity to interact with you as we go along. Faiz joined us in June 2026, and he brings more than three decades of experience spanning telecommunications, information technology, and financial services.
Speaker #2: He has built a strong track record across different markets, the latest one being Nigeria, with deep expertise in driving growth, and we believe that the experience that he has had thus far will help us to be able to scale our fintech platform, help us to drive the agenda of deepening financial inclusion, and also help us in our ambition to continue to expand access to advanced digital financial services for customers and our ecosystem partners.
Speaker #2: So you're most welcome, Faiz. In the same breath, I also really want to acknowledge the great work that was done by Sarah Bateta-Okwi, the Mobile Money Chief Finance Officer, for the time that she was given the work of stewarding our business as we were doing the transition.
Speaker #2: Thank you very much for the leadership and the stability that you provided during this time, Sarah. With that, allow me to turn to the details of the report, and we'll start off by looking at the broader operating environment and the key themes that shaped our performance in the first half of 2026.
Speaker #2: So, largely, the macroeconomic backdrop remained broadly supportive in the first half of the year. The combination of stable inflation, as you can see from the graphs, and resilient currency, along with prudent macroeconomic policies, provided a favorable operating environment.
Speaker #2: Uganda's economy is estimated to have grown by about 6.4%, up from 6.3% in the prior year. This growth has largely been supported by the commercialization of agriculture, advancements in manufacturing and ICT, and major infrastructure investments.
Speaker #2: The size of the economy is now estimated at about $69.3 billion, with GDP per capita at $1,452, which reinforces Uganda's lower middle-income status.
Speaker #2: With GDP growth in the financial year 2026/2027 expected to reach 10.2%, we expect stronger customer spend, which should augur well with the growth ambitions that we have detailed to you.
Speaker #2: Inflation remained relatively subdued during the period, despite upward pressure from higher energy prices. This follows, obviously, what we are all familiar with around the geopolitical tensions in the Middle East. Headline inflation averaged about 3.1% in the first half of 2026, compared to 3.6% in the comparable period last year.
Speaker #2: I think the most significant pressure point for us was fuel, with liquid fuel inflation closing the half-year at 26.2%, reflecting the pass-through effect of higher global oil prices.
Speaker #2: This remains an area we continue to monitor closely, given its potential implications for operating costs and consumer spending. On the currency front, the Ugandan shilling depreciated by 1.4% in the period, largely reflecting foreign exchange pressures arising from elevated oil prices and increased corporate demand for foreign currency.
Speaker #2: Overall, I think we remain confident in the operating environment. It has remained resilient, although not without its challenges. Against this backdrop, however, our focus remains firmly on disciplined execution, protecting the resilience of our business, and continuing to invest in areas that support sustainable long-term growth.
Speaker #2: Against this backdrop, we are pleased with the way we were able to execute during the first half of the year. We had quite a number of operational disruptions all the way from January, when we had the elections, but it's good to see that month-on-month and quarter-on-quarter, we have been able to maintain growth across our core platforms.
Speaker #2: And as we have continued to invest in network quality, future capacity, enhancing our value propositions to our customers, and creating an advantage in terms of the experience that we deliver, this has preserved a resilient financial profile.
Speaker #2: We continue to strengthen our market position, ending the half-year period in 25.4 million mobile subscribers, up 11.2% year-on-year, adoption across our growth platforms remained robust, as you can see on the screen, with active data subscribers increasing by 16.3%, 12.6 million, and active fintech subscribers growing by 11.5% to 14.8 million.
Speaker #2: This reflects sustained demand for our proposition, supported by disciplined customer acquisition and strong execution across both our connectivity and fintech platforms. A key feature of this was our continued investment in our network.
Speaker #2: We invested 317 billion Uganda shillings in the network, with 4,162 cumulative sites to date, up 12% from the prior year. 5G sites increased by 31.3% to 872, and these are strategically positioned in major cities across the country.
Speaker #2: And this investment, obviously, is helping us to be able to expand our capacity, ease congestion in high-traffic areas, and also help us to improve the quality of service that we are delivering to our customers, especially as the growth of data continues to rise in this market.
Speaker #2: Financially, the business model remained resilient. Service revenue increased by 9.4%, while total revenue grew by 9.7% to UGX 1.9 trillion. EBITDA margin remained strong at 51.2%, above our medium-term guidance threshold, while PAT margin improved to 19.5%.
Speaker #2: Overall, our first-half performance reflects the balance we continue to achieve across the business: growing our customer base, investing for future growth, and maintaining healthy returns for you, our shareholders.
Speaker #2: Andrew will take you through the financial performance in greater detail shortly. As we grow the business, we remain guided by our commitment to shared value for our customers, shareholders, and broader stakeholder base.
Speaker #2: Our sustainability agenda is embedded across four pillars: eco-responsibility, sustainable societies, ethical governance, and economic value creation. On eco-responsibility, we continue to make progress under Project Zero. During the period, we commissioned a 490-kilowatt solar power system at our headquarters.
Speaker #2: If you visit us or you get a drone view of our roof, it's covered with solar panels, which is something that we are really, really proud of.
Speaker #2: It helps us to be able to support a hybrid power model, which is run alongside hydroelectricity. Across our tower infrastructure, more than 90% of the sites continue to operate on clean energy sources, including solar, hydropower, and lithium-ion batteries.
Speaker #2: Through the MTN Foundation, we spent 2.3 billion shillings on corporate social investment. A highlight for us this quarter was our partnership with the Ministry of ICT and National Guidance and Centenary Technology Services, where we launched the MTN Spark Hub at Kabale University.
Speaker #2: This initiative forms part of the broader MTN ACE program, which will seek to establish four regional innovation hubs and support more than 20,000 students and community members across Uganda, as we hold our inch in driving the digitization of our people and this great country.
Speaker #2: For our people here at MTN, we continue to invest in future-fit skills through AI fluency training, supporting responsible AI adoption across the business, and strengthening our ability to deliver better and more innovative solutions for our customers.
Speaker #2: Okay, moving on to the next slide. We remain committed, overall, to all our partners as we seek to protect our long-term value. Based on our overall direct economic contribution, we have continued to play a meaningful role in delivering Uganda's national development.
Speaker #2: In the first half, we contributed over UGX 803.8 billion in direct and indirect taxes, reinforcing our support for government revenue mobilization and the delivery of essential public services.
Speaker #2: And this reflects our belief that growth and impact must reinforce each other, and that the expansion of connectivity, digital inclusion, and financial inclusion should translate into meaningful progress across communities in Uganda.
Speaker #2: Now, from a regulatory perspective, it has been an interesting quarter—an interesting half of the year. We have engaged constructively with our stakeholders across our operating landscape, while maintaining the highest standards of governance, compliance, and responsible corporate citizenship.
Speaker #2: On our national telecommunication operator license obligation, we have continued to invest in geographical coverage across the country, and this is something that we have been progressively reporting back to you on as we engage with the regulator.
Speaker #2: We are working closely with them to ensure that we close the remaining coverage gap in a sustainable way. Our investment in additional sites, network capacity, and fiber expansion is central to improving customer experience, expanding access, and supporting the broader agenda of digital inclusion across the country.
Speaker #2: We also experienced, in this specific quarter, a gradual recovery in business activity following the disruptions that we had in Q1, especially from the trade formalization reforms that happened earlier in the year. Specifically, they actually happened across the country, but the larger impact was in Kampala, where 60% of the GDP of the country comes from.
Speaker #2: These reforms obviously affected parts of the distribution and MoMo agent ecosystem, especially in the urban centers. But, through close collaboration with ecosystem partners and other stakeholders, we have been able to restore momentum across key channels, and we remain focused on strengthening the resilience of the trade ecosystem to support sustained growth and improved customer access.
Speaker #2: Throughout the period, we sustained constructive and collaborative working relationships with the Uganda revenue authority, supporting effective resolution of tax matters and ongoing business reviews.
Speaker #2: The Uganda Communications Commission, which is our connectivity regulator, notably issued a nationwide enforcement notice targeting illegal public Wi-Fi operators as part of our efforts to protect consumers, safeguard communication infrastructure, and uphold the integrity of Uganda's digital ecosystem.
Speaker #2: The Commission stated that the enforcement exercise would be undertaken in collaboration with licensed internet service providers, other licensed communication operators, and relevant government agencies.
Speaker #2: According to the UCC, the objective is to ensure that all providers of public internet services operate within the established legal and regulatory framework and are held to the same standards of accountability, security, and service reliability that we are held to.
Speaker #2: Over time, this should help us to support a more competitive environment for the data ambitions that we have in this market. Turning to our commercial performance, we have seen good momentum across our connectivity and fintech platforms in the first half.
Speaker #2: This will be supported by disciplined execution, targeted CVM interventions, and sustained investment in the quality, coverage, and capacity of our network. Starting with data, we continue to see growth in the active base and in usage. Active data subscribers have increased by 16.3% to 12.6 million, while usage per customer has grown to 3.5 GB per customer.
Speaker #2: This growth is supported by improved network experience, higher smartphone penetration, and the continued adoption of home broadband, which is also contributing to the overall traffic growth.
Speaker #2: On the network side, we have sustained investment in capacity and coverage. As mentioned earlier, 4G population coverage has now increased to 93.3%, giving more customers access to a better data experience and supporting the higher usage we are seeing on our network.
Speaker #2: Smartphone penetration remains an important lever for data growth, and now stands at 42.2%. We continue to support this through device financing and open market partnerships, because customers need affordable 4G devices to be able to fully benefit from the network investment we are making.
Speaker #2: That said, we are also mindful of the global increase in chipset prices, which has obviously put a lot of pressure on device affordability and could potentially slow down the pace we have been seeing in smartphone migration.
Speaker #2: And this is something that we are paying attention to—working directly with device manufacturers, but also specifically lobbying the government, especially the Ministry of Finance, to consider the taxation policy around entry-level smartphones so that we can be able to create a lot more affordability for new users who are coming into the ecosystem, and lowering the barriers to entry by making sure that the devices are affordable.
Speaker #2: On the home broadband side, it has been encouraging to see the progress that we have made, which is in line with our strategy to accelerate home during the period.
Speaker #2: Our fiber footprint has grown by about 9 to 9 has grown by 90.1%, while the home broadband base grew by 68.9%. We will continue to scale fiber and fix wireless access in targeted locations, because customers are looking for a worry-free experience.
Speaker #2: They're looking for an unlimited experience, and therefore, this is a demand that we would like to meet, as well as ensuring that at the same time, we are able to deliver reliable and high-speed data connectivity, even as we also seek to differentiate ourselves on the type of service that we deliver all the way from discovery, installation, as well as support for our customers on our Workernet home broadband service.
Speaker #2: Moving to voice, performance has been resilient—mainly supported by the work we continue to do on acquisition, retention, and making sure that our propositions remain relevant across the base.
Speaker #2: Active voice subscribers have increased by 11.2% to 25.4 million. Voice remains relevant in this market, especially when you consider the level of smartphone penetration and the role, and that therefore means that voice will continue to still have a role to play in everyday communications for many of our customers.
Speaker #2: From a network perspective, we continue to support this base through 2G population coverage, which now stands at 99.3%. We have also remained focused on targeted site densification and network quality so that customers can get a reliable experience whenever they're using our services.
Speaker #2: I should also call out that there's quite a bit of work that we're doing on service delivery, going beyond our network coverage. We have improved how our customers engage with us across our different touchpoints, and the aim is to make us accessible.
Speaker #2: Make sure that the experience is a lot better. Make sure that we, as a business, are a lot more responsive and consistent with our customers, whether they are interacting with us physically or interacting with us through our digital channels.
Speaker #2: Usage per customer will soften in this period, which reflects the broader shift we're seeing towards data-led communication. Even then, voice remains an important part of the portfolio.
Speaker #2: And our focus is to keep managing it well, support usage through personalized bundles, and continue giving customers affordable value as their behavior evolves. Finally, on fintech, it has been an encouraging performance as shown by the resilience and the continued growth of the MoMo ecosystem.
Speaker #2: The first quarter, obviously, was affected by disruption in the agent network, which had an overall impact on our ability to deliver.
Speaker #2: Service. But as I've spoken to earlier, we have engaged with the various government officials and also restructured ourselves to be able to align with the trade formalization reforms that impacted especially those agents who serve many of our customers operating from the roadside.
Speaker #2: Since then, quite a bit of work has been done by our distribution teams to support their relocation, to restore activity, and also to rebuild the transaction momentum that we had.
Speaker #2: And this is evidenced by the stronger recovery that you can see us having as we came through in Q2. Measures of this active fintech base grew by 11.5% to 14.8 million.
Speaker #2: Transaction volumes increased by 9.5% to 2.6 billion, while transaction value was up 26.8% to 113.3 trillion. This shows that MoMo continues to deliver and play an important role in the daily lives of our customers. As we continue to roll out a lot more use cases, especially on the advanced services platform, this penetration and entrenchment should help us to realize even more value.
Speaker #2: From an agent ecosystem, we will continue to focus on deepening the ecosystem. We were able to grow our agents in the period by 23.8% to 270,500, and merchants reached an all-time high of 199,800, just slightly shy of the 200,000 mark.
Speaker #2: The focus, therefore, is not just on the size of the network, but also on supporting our partners in the merchants and agents ecosystem in a way that improves their productivity, strengthens our competitiveness, and also drives higher-quality transactions across the platform.
Speaker #2: Our advanced services are a key part of our portfolio, and our focus remains on broadening the use cases that we have here as we shift the fintech revenue mix over time.
Speaker #2: We are seeing encouraging traction in this space, especially in our pay, borrow, and invest propositions, as well as payments for merchants and bill payments.
Speaker #2: As a result, the contribution from advanced services has improved to 30.8% over the period, helping us to move MoMo beyond basic transactions and make it more useful in the daily lives of our customers.
Speaker #2: So, while the market remains competitive, I think we are confident in the priorities that we have set for ourselves as a leadership team in this market.
Speaker #2: What we seek to do in terms of strengthening our customer base, driving agent and merchant activity, and driving education around advanced services is to continue to position MoMo as the everyday currency for every Ugandan.
Speaker #2: With that overview of the market, I'd like to hand over to Mr. Bugembe to take you through the overall financial review. Andrew, over to you.
Speaker #2: Thank you.
Speaker #1: Thank you, Sylvia, and good day to you all. So, if you look at our overall, I would say, revenue mix for the half-year, we did have a good quarter if you notice from our sense.
Speaker #1: Where we did have over 11% quarter on quarter growth year on year. If you're comparing, obviously driven by both data and I would say voice still stood strong.
Speaker #1: We do expect it to drop as data grows. But we must say, over the year, almost 2% growth is great. So, as Sylvia has mentioned, data is obviously affected by—like, when you look at it from an H1 perspective, Q1, we all know what happened.
Speaker #1: The election disruption added to the agent issues that I think Faiz will talk to you about, but also the trade regulatory instructions. Obviously, it also affected the data growth.
Speaker #1: I must say, it's still decent if you look at the ADS growth—over 16%. But yes, that still came through. Now, when you look at the EBITDA performance, obviously we need to go back to the context.
Speaker #1: We tried to explain last time that we accelerated our investment upfront in H1. We also took on a lot of modernization, especially within the Kampala Greater Central area.
Speaker #1: As you find out, not all the sites we've put up this year are full 4G in all the areas we've gone to. So we've ensured that the investment we've been making over time to support data growth continues.
Speaker #1: Now, the impact of that obviously is two- or threefold: you have the full site cost coming through, and while topline, given the disruptions—election and all that—is not coming through pretty much at the same time. If you look at this year, obviously, you have the fuel impact that has come through, especially more in Q2.
Speaker #1: Fuel prices are up by around 43% if you're looking at where we were in Q1 versus Q2. But then also remember, we had mentioned we have once-off VDP.
Speaker #1: It came to 12.76 billion. If you look at H1, if you do remove that, EBITDA growth will be around 6% year-on-year. Now, obviously, we do have great PAT growth, but two things.
Speaker #1: We still have strong, I would say, higher increment in our depreciation and amortization, given what I've just explained. As you can see, our capex is up over 44%.
Speaker #1: And then, also, given that you're bringing up all the sites upfront—over 200 sites up and running—it means your financing cost, which will affect the financing charges, could go a bit higher than usual.
Speaker #1: And also, just to maybe elaborate, in areas where we are modernizing, remember, customers already exist. So, you need to move in strong commercially on the devices.
Speaker #1: So maybe just in context, we invest a lot in our device financing program, but also support external devices that are bought on the open market, which is what the majority are.
Speaker #1: And the whole point was just to ensure that, from a commercial perspective, we're able to support the investment in the new sites, technology, and modernization.
Speaker #1: So that will speak to that. For net debt, I think just one comment is that this year we began paying our debt. If you remember, the debt we secured over a year ago, we had one year where we were only paying interest, and now we've started to pay the real debt down.
Speaker #1: And then also, if you recall, we changed our dividend policy, where we now pay per quarter, and that's why we've had another dividend that has been approved and declared by the board.
Speaker #1: If we move to the next slide—or maybe, before I forget—on the PAT, you recall last year we had a one-off tax settlement.
Speaker #1: So that’s why if you look at our EBITDA growth versus the PAT growth, you have that abnormal jump. That’s driven by the 110 billion that we had last year.
Speaker #1: So, when you look at our revenue mix, pretty much you can see that data and mobile money do drive our real growth. And you can see, as expected, data contribution increases.
Speaker #1: MoMo pretty much increases, and voice should be dropping. And that's the same, I would say, if you look at our capital allocation—that's where we're making the key investments.
Speaker #1: But apart from just technology or sites, there's a lot of investment that you do out on the trade and commercial element. When we move to the next slide, you'll see, I would say, a breakdown of our costs that I'm speaking to.
Speaker #1: So if you look, for example, at our operating costs, when you remove the one-off, you'll find operating cost below in gray should be growing by about 15 or 18%.
Speaker #1: Okay. And then, cost of sale, as I mentioned, I must say that also, despite a drop in the MTR rate, the volume of traffic for off-net grows, which I would say is important from a strategic perspective.
Speaker #1: Whereas subscribers don't have to switch SIMs, it comes at—I would say—a little higher cost, but it's quite a necessary investment to ensure we support the new phones or devices we're bringing to the network.
Speaker #1: So your overall expense growth year-on-year would have been about 13% if you remove the one-off VDP. And as you can see, from an expense composition perspective, not much has changed.
Speaker #1: I must say, if you look at it year on year, despite the increased fuel prices—and it could have been worse if Uganda didn't have, I would say, managed inflation.
Speaker #1: Because, as you know, our tower contracts—which are quite key and a huge OPEX component—are triggered by inflation. So, now, that's well managed.
Speaker #1: And the fuel impact pretty much increased in Q2, not Q1. So, what I've just described is where you find EBITDA margin has dropped.
Speaker #1: Of course, the Q1 impact is quite significant, with the disruptions mentioned. And also the accelerated investment from both being sites OPEX supporting commercial is where you find that we did have a drop in EBITDA margin perspective.
Speaker #1: But still, we're above our guideline. Then, if we move to the next slide, you can see our investment philosophy hasn't changed so much if you look at the allocation.
Speaker #1: A lot more on the network side. We've increased, I would say, a bit more this time on the IT side. And also on the network side, I know we like talking about number of sites, but we've also increased investment in what you call resilience.
Speaker #1: That's in our cybersecurity—there are some areas that you need to clean up that might not give you immediate, I would say, revenues. But if you don't, and anything goes wrong, you pay the price.
Speaker #1: But key to note, you can see the new sites we're bringing on. So, they have all the technologies, 2G to 4G, and you can see the numbers.
Speaker #1: So that's the accelerated investment we've done being very clear. And I think I've already discussed the net debt. So I think with that, I should be handing over to Sylvia.
Speaker #1: Thank you.
Speaker #2: Okay. Thank you, Andrew. So, in terms of the 2026 priorities, as you can see them on the screen, we have remained consistent with what we had communicated to you before with regards to the agenda items and the priority items that we will be paying attention to in line with our Ambition 2030 agenda.
Speaker #2: Obviously, this market remains critical for delivering in terms of overall connectivity as well as our fintech platform. And we also have presence on our biobath platform, which is our wholesale arm for delivering service to our ISP customers.
Speaker #2: When I look at our connectivity business, the focus is to keep on delivering growth across the core. We have seen how voice has performed. We have seen the opportunities that remain on data, especially as we invest in smartphones and continue to drive network coverage across the country.
Speaker #2: And we believe that coupling this with the momentum we have also seen on targeted customer acquisition propositions, as well as CVM-led initiatives, should help us continue to stimulate voice performance in this market, drive higher data usage, and continue to improve the quality of service that we deliver to customers.
Speaker #2: Home broadband already spoke to it earlier. There's still significant opportunity to be able to win in the home. I think the run here in this market is who will have the biggest land grab because the first person who gets into the home is the one who gets to stay there, especially if you have a consistent service delivery.
Speaker #2: So, we'll use both our fiber and fixed wireless access to meet the demand for reliable, high-speed connectivity. As I said earlier, the differentiator here will be the customer experience that we deliver, which will remain central—especially in an increasingly competitive market.
Speaker #2: I think the last time I checked this market has over 36 ISP players. And therefore, to remain at the top, we must ensure that our business and especially our business model are value propositions and how we execute remains ahead of the market for us to continue to win.
Speaker #2: Network will continue to be a space that we're investing in, but it's going to be not only just aligned to our coverage obligation, but also to enhance and strengthen the quality of the customer experience that we deliver to our customers this is important.
Speaker #2: So that we can continue to maintain the English has gone out of my head. So that we can continue to remain the best network in Uganda for all our different customers, our consumer customers, our business customers, our government customers, our small and medium enterprises, and also support the broader digital infrastructure agenda for this country.
Speaker #2: For fintech, this remains an exciting space. It is a significant part of our growth over the next three to four years. We are focusing, in this second half, on continuing to leverage the momentum that we got in Q2 to help us do even better in this second half, following the challenges that we had in Q1.
Speaker #2: Strengthening the ecosystem growing the ecosystem in terms of agents and merchants growing the use cases will ensure that we continue to drive transactions over the period.
Speaker #2: We will continue to progress the work that we are doing along the structural fintech structural separation. Our focus has remained on proactive stakeholder engagement.
Speaker #2: We have not finalized all the approvals that we require to get in this market, which has caused us to slow down a bit. But we are confident that we should be able to conclude that in the coming months and should provide you with a more significant update on this by the time we close this second half, because we continue to believe in the value unlock and long-term value creation that the structural separation will bring to MTN Uganda.
Speaker #2: Obviously, as Andrew has spoken and has also been able to demonstrate from our half-year results, disciplined capital allocation, expense efficiency, and balance sheet flexibility remain a critical part of our overall financial strategy.
Speaker #2: With our capital allocation focusing on the items that will ensure that we create better competitive advantage in terms of the overall network experience that we deliver, the customer experience that we deliver, and overall improving our competitive position in the market.
Speaker #2: At the same time, building AI fluency across the business is a key imperative, and how we use data and automation to improve our decision-making, optimize operations, and support margin resilience remains a critical part of our strategy.
Speaker #2: So the message, as we look ahead, is very clear. We will sustain the momentum, execute with discipline across connectivity and fintech, and continue to invest in the platform that supports long-term growth.
Speaker #2: This is how we will keep on creating value for our customers, for our shareholders, and for the business. In line with that, we maintain our medium-term guidance of delivering on opportune service revenue growth.
Speaker #2: Fintech growth of at least 20%, stable EBITDA margins, above 50%, and capex intensity excluding leases in the mid-teens. This will be supported by disciplined execution and ongoing expense efficiency initiatives.
Speaker #2: I think in closing, I want to thank all our customers. I want to thank all our shareholders I want to thank all of the MTNers for your continued commitment and execution and our partners and regulators for your continued collaboration.
Speaker #2: Thank you for taking the time to listen to us today. I will now hand it back to...
Speaker #1: Thank you, Silvia. I'll start with the first question. A warm welcome to Mr. Alrega. There's a request if you could give an update on what's happening in the market, your take on the MoMo agent cleanup in Kampala, and what we're doing to make sure that the agents are comfortable.
Speaker #1: Yeah.
Speaker #3: Thanks so much, Amanda. Good afternoon. Everyone. On the agent side, especially the trade formalization reforms that are happening countrywide, we are supporting and assisting our agents to relocate from where they've always operated from to avoid the disruptions we have because they are required to operate under brick and mortar.
Speaker #3: So, we are supporting them in Kampala. It's largely completed. However, our country is still ongoing, but we're working very closely with the authorities to ensure that we minimize the disruptions that impacted us in Q1 negatively.
Speaker #3: So I'm comfortable that that's under control. And then overall, as you've seen, there's a recovery in performance in Q2 compared to Q1, and we expect that momentum is going to be sustained into Q3.
Speaker #3: As Silvia has committed, our medium-term guidance—we still expect to work towards meeting our medium-term guidance on our performance. So that's where we are in terms of a summary and the recovery that we are focused on ensuring we deliver.
Speaker #3: Thank you.
Speaker #1: Thank you. Andrew, there's a question on diesel costs and what percentage of our opex they cover.
Speaker #4: Okay, so if you look at diesel cost, 11% of our opex is what is covered, which we've been monitoring. But I must say that, as mentioned, it could have been worse, but in Uganda, the impact of fuel price was almost muted in Q1.
Speaker #4: We felt it more in Q2. Fingers crossed, if the fuel prices remain stable as they are, Q3 might not go up as much.
Speaker #4: But the advantage you have is that in Uganda, the contribution of fuel prices overall to inflation is about 6.5%, so it's not too high. So at least, if inflation still stays within range of below 5%, we should still be okay.
Speaker #4: But we'll have to just keep monitoring as we continue. The other is we also continue to invest in, I would say, electrification on some of the sites that are close to the grid to reduce overall impact of fuel and not rely so that continues.
Speaker #4: And also, in most of the new sites that we build that have enough space where we're able to also have batteries and solar. So we're trying to look at it in different ways.
Speaker #4: Yes, where we can avoid it, we'll obviously have to use fuel, but we're also trying to modernize in many of the areas where we can, because it's way cheaper to invest in that than to pay the fuel prices.
Speaker #4: Amanda, we can't hear you. You're muted.
Speaker #1: Okay. Thank you. So Silvia, can we say that business has now come back to normal operations post the election disruptions?
Speaker #2: I think as evidence, we have had better momentum in quarter two out of the challenges that we had in quarter one. And I think the challenge for my team and I is to capitalize on that to ensure that we continue to keep pace in quarter three.
Speaker #2: Obviously, the challenges that we faced did disrupt us quite a bit. Securing the trade support and making sure that we continue to pace has been quite significant for my team and me.
Speaker #2: But I'm encouraged by the results that we have seen in Q2, and now the goal is to keep on pacing that. By and large, a lot of the challenges that we had have been addressed, and now I'm hopeful that we don't have new ones coming in the coming days.
Speaker #2: And on the basis of that, then I think we should have good momentum to deliver good results. Thanks.
Speaker #1: Thank you. Andrew, a question on capex intensity. Quite a lot of capex has been done in H1, significantly higher than the previous year. Do we expect to continue this intensity throughout the year?
Speaker #1: Where do we expect to close 2026?
Speaker #4: Okay. I think maybe now we're around 24, and last year at this time, we were at 16. But the year ended up at around 23 point something.
Speaker #4: So if you look at it from a year-to-date perspective, 2025, and this is capex including the leases, we ended up at around 23. Now we're looking at the same capex with the leases.
Speaker #4: The only difference is timing. So, last year, we had a couple of sites coming up towards the end. And if you recall, as we mentioned, we added extra investment in Q4, where we were modernizing a lot of the areas in Kampala.
Speaker #4: That modernization started towards the end of last year. So the difference is timing. But to answer your question, so we do expect our intensity to pretty much remain where we ended last year, not too different.
Speaker #4: But of course, lower than where we are today. The only reason it's high is because of our upfront and also the Q1 disruptions. So we should be pretty much where we were last year because of the acceleration that we are making.
Speaker #4: But yes, I think, yeah, it should be pretty much the same if you taper down as we continue towards the end of the year.
Speaker #1: Okay, Silvia, there's an appreciation for what MTN is doing to improve the network across the country. With Starlink coming through, what's our plan?
Speaker #2: I think the plan is twofold. I mean, we celebrate the advancement of technology and where we can collaborate with do. As you had earlier, and we have mentioned to you before, we have obligations in terms of geographical coverage that we must meet, the regulator has given us a timeline of the next three years to make sure that we deliver on 90% 2G geographical coverage across the country.
Speaker #2: And to be able to do this in a fashion and manner that is economically sustainable, partnerships with Starlink are going to be critical. So we are collaborating with them.
Speaker #2: And I think you will be seeing what will be coming out of this collaboration in the coming days. But also, at the same time, we are conscious of them as a competitor.
Speaker #2: And therefore, this is some of the reasons why you have seen us make some changes in terms of how we are delivering overall home broadband proposition to ensure that we remain competitive even as we also continue to collaborate with them.
Speaker #2: So we welcome them to this market. And I'm sure it's also going to play its role and the role that it's supposed to play in driving the overall digital transformation agenda of this country.
Speaker #2: Thank you.
Speaker #1: Thank you. Andrew, there's a question on margin pressure in Q1. We had challenges related to election pressures. In Q2, fuel cost pressures amidst other challenges.
Speaker #1: Could you give some more color if there are any expected in the remainder of the year?
Speaker #4: Yeah, so I must say, yeah, it's been a—I wouldn't say strange year, but a weird year. A lot of geopolitical uncertainties, elections, trade orders, so yeah.
Speaker #4: So the margins are obviously under pressure. It's a, I would say, catch-22 situation. Because if you look at the areas where we're investing in, it's like from a capital allocation perspective, if you don't do it now, you pay the price in the future.
Speaker #4: So, like I mentioned, what we are changing—like devices—is trying to do less in-house. To minimize the subsidies, I would say, if there are any bad debts, we would rather support the open market where they are strong.
Speaker #4: Even device financing, changing some of the devices to better devices, lower NPL. So we're making those changes. If you've noticed also EP so far, or expense efficiency, we are over 11 billion.
Speaker #4: We intensifying that. But also cautious in areas that we don't pull back investment where it's needed. Especially after investing quite heavily in capex. So you'll find that a lot of the costs you're seeing today are commercially driven and needed that we had to do.
Speaker #4: The difference is, a lot of the investment we're doing at our sites—the revenue uplift doesn't come upfront. It comes two, three months after. So that's where there's an issue of timing.
Speaker #4: But to answer your question, yes, we do expect the margin to go up, even if we are guiding above 50. So, we expect the margin to be higher than where we are today because we're intensifying in various areas.
Speaker #4: And also, changing a couple of things here and there—like I mentioned about the fuel in the investment. So, we are quite deliberate in reducing our overall cost, but being cautious not to save some costs this year and pay the price after.
Speaker #4: So we're just trying to balance that as we move along. But yes, the margin will improve.
Speaker #1: Thank you, Andrew. Silvia, there are quite a number of questions on the public Wi-Fi resellers. Could you tell us more about this?
Speaker #2: So obviously, Africans are very entrepreneurial. And in Uganda, the entrepreneurial than most. So as we have worked to expand our broadband coverage, putting up infrastructure across the country, I think there's we have also created opportunity for people who believe that they can be able to resell this capacity of the broadband that is provided by ISPs.
Speaker #2: In this market. And obviously, that raises a challenge, which we have raised with various state agencies, including the regulator, because it is not regulated.
Speaker #2: Most of this is sold below cost. Also, a lot of these players are avoiding tax, and that is the reason why they're able to sell below cost.
Speaker #2: So it's something that the regulator has taken action on. I mean, obviously, the way you also have to look at it is that there's also demand.
Speaker #2: For data in this market. But customers are will always be looking for who can give it to me fastest, who can give it to me now, who can give it to me cheapest.
Speaker #2: And therefore, then that opens up within the ecosystem opportunities for Wi-Fi resellers such as this to be able to do this. So we are not really against this.
Speaker #2: You cannot stop something like this. But I think what we are asking is for it to be regulated and to be a lot structured so that it also does not undermine the investment of the main players in the mobile space as ourselves and the other MNOs in this market who have made significant investment to be able to deliver this.
Speaker #2: So the regulator is looking at it. And we have seen some actions coming from here. And I think as they come into this space to be able to regulate this, we should see this being now managed in a much more in a much more better way.
Speaker #2: Thanks.
Speaker #1: Thank you. There's a request to appreciate our medium-term guidance. And what actually defines it. In terms of our expectation on service revenue. And maintenance of our EBITDA margins.
Speaker #1: Andrew, this is for you.
Speaker #4: Well, okay. I think when we give our medium-term guidance, as you know, that's for three years. For 2026, where we don't give guidance, especially right now, there's a lot of disruption.
Speaker #4: I don't know. When you look at the Strait of Hormuz, anything can move with fuel prices staying stable. So we are a bit cautious on how that will pan out in Q2 and Q3.
Speaker #4: Whether that will have quite a higher impact from a margin perspective, commercially, yes, we're going to push. And also, as Silvia has mentioned, again, it's difficult to tell with the Wi-Fi reseller how far, as we engage and have it under control, how long that will take.
Speaker #4: So that's why, this time, we prefer not to give guidance for 2026 and prefer to focus where we are confident over the next three years.
Speaker #4: That's why we give the medium-term.
Speaker #1: Thank you. There's an interesting question in fintech for first. First, with all factors constant, what is your expectation for fintech this year?
Speaker #3: Thanks, Amanda. So I will stick to the medium-term guidance that was issued. You will see a lot of acceleration and growth on advanced services because that's where we're focused.
Speaker #3: And that's what we believe is the future of our revenue. So our revenue profile should slant more towards advanced services. But given we assess the environment and we assess the macros before we issue guidance, I will stick to the medium-term guidance that our fintech will grow at around 20% year-on-year.
Speaker #3: I don't know if that is adequate, but if it is not adequate, then we can share further information through you, Amanda, to the investors.
Speaker #3: Thank you.
Speaker #1: Okay, thank you. So as we close the call, I'll encourage Andrew and Grace to give their parting shots. I'll start with Andrew. Andrew, what's your final comment?
Speaker #4: Well, look here. Like I mentioned, it's an interesting year. It's a tough one, with all these disruptions. But at the end of the day, the balance sheet is resilient to take on opportunities.
Speaker #4: So we don't want to shy away. We also don't want to be defined by one year, and not make the right investments. So yeah, we'll hang in there and continue doing what we believe is good for our customer and where the opportunities are.
Speaker #4: For sure, I would say that 2025 from a profitability perspective, if you exclude the ones of, is not where we want to be. But given where we are today and what we've measured, we believe these are the right bets or investments to make.
Speaker #4: Especially for better growth in the coming years. So yeah, till next quarter, so far, happy for the, I would say, better Q2 performance. Thank you.
Speaker #3: Thank you, Amanda. I will go. So on fintech side, number of things that we've seen. One would shown good momentum in Q2 compared to Q1.
Speaker #3: And we'll sustain that. We expect to sustain that through the initiatives that we're implementing. Then two, we're focusing on ensuring that our subscribers move from using USSD primarily into application, applifying them because inherently then we enable them to utilize the full bouquet of services that we have on fintech side.
Speaker #3: So we'll continue on that objective, with a lot of effort to ensure that the majority of our subscribers who are holding smartphones move into usage of their apps. Then third, advanced services are quite critical because we believe that's the future of our business—especially merchant payments, SMEs, SMMEs, anyone who is delivering service or product. Digitizing them and enabling them to receive payments in lieu of their goods and services is going to remain a major focus.
Speaker #3: Then four, credit. We see very good momentum in borrowing and credit. And we actually will sustain that with a lot of with internalization of our capabilities.
Speaker #3: It has enabled us to actually work much better in that area. So that's a summary that I will give. We are expecting to see further momentum in Q3.
Speaker #3: Thank you so much.
Speaker #1: Thank you, Silvia. We'll hand over to you to close.
Speaker #2: All right. So thank you to everyone. And for making the time to be with us. I think the overall message from us as a team, when we came out of the Q1 results, they were tough.
Speaker #2: I mean, we won't lie about that. When you look at the impact we had from elections what we had estimated would be the election impact, I think, was two or three times that.
Speaker #2: And it threw us quite a number of percentage points off the growth that we had same time last year. When we also look at the trade order, which really affected our operations in Kampala, as well as other distribution changes that we made, it took a while to recover.
Speaker #2: But for me, what I believe, I think I had somebody once say is that the leader's greatest advantage is momentum. And I think what we have been able to signal and demonstrate not just speak about, but demonstrate with our Q2 performance is that we have been able to evidence that momentum coming out of the challenges that we have in we had in Q1.
Speaker #2: So for me, I am excited. I know many of you are seeking to understand what then happens in half two. Where do we land in terms of our guidance?
Speaker #2: We will stay within the remit of what we have given you in terms of our three years. We will continue to drive in half two and especially now in Q3, the impact of the momentum that we had in momentum advantage that we were able to gain back in Q2.
Speaker #2: This momentum, you can see it in customers. You can see it in revenue. Our revenue in Q2 was now back to growing in double digits.
Speaker #2: You can see the impact that it has had in terms of our margins. And I'm confident that as we continue to ride that, and the also leverage the broader stability that we can see in the macros, we should be able to deliver also a good Q3.
Speaker #2: So, we look forward to engaging with you in Q3. Challenges remain, but that is the reason why we are here as leaders. And as we always say, as we continue to drive the business agenda, pull together as a team, and partner with everyone in the ecosystem, I believe the impact that you seek—us as shareholders—will be evidenced by the dividends that we will be paying for you in the next couple of days.
Speaker #2: We'll continue to be seen throughout the year. So thank you for your support. Thank you for logging in. Thank you for your questions. If we didn't get your question, within the allotted time, you can get through back to us through the investor relations team.
