MTN Group added nearly 29 million subscribers in 2020, to reach a total of 280 million across 21 markets. Service revenue grew 19.9 percent to ZAR 170 billion and was up 11.9 percent on a constant currency basis, led by growth in Nigeria. Despite the resilient results, the mobile operator said it's not paying a dividend for the year, due to uncertainty about asset disposal timings and the impact of the pandemic.
EBITDA increased by 21.9 percent and was up 13.4 percent at constant currencies. Adjusted for forex, the EBITDA margin improved by 0.9 percentage points to 42.7 percent, benefiting from the expense efficiency programme. The mobile operator reported a 52 percent increase in adjusted headline earnings per share, a four-percentage point increase in return on equity to 17 percent and a more than doubling in operating cash flow to ZAR 28.3 billion in 2020.
The group said it reported a very strong set of operational and financial results for 2020, displaying business resilience under Covid-19 pressures and a challenging macroeconomic environment. The mobile operator also announced its re-positioned strategy, Ambition 2025, to accelerate growth and unlock the value of its infrastructure assets and platforms.
The new strategy will be based on the pillars leading customer experience; the best talent, culture and future skills; value-based capital allocation; ESG at the core; and technology platforms that are second to none. By 2025, the company aims to reach total subscribers of 300 million, 200 million data subscribers and 10 million home broadband users, as well as 100 million users of its mobile money and Ayoba platforms. More details will be provided at an analysts meeting in June.
In the near-term, MTN is focused on de-leveraging the holding company and it reduced net debt by ZAR 12 billion last year, to ZAR 43 billion. However, the leverage ratio for the year was unchanged at 2.2x, as cash upstreaming from Nigeria remained challenging, the company said. MTN raised ZAR 4.3 billion from its asset sale programme and said it remains focused on completing some of its larger transactions, which did not proceed in the year due to challenging market conditions.
In this regard, MTN suspended the final dividend for 2020 due its near-term focus on faster de-leveraging of its holding company as well as three conditions which negatively impacted this objective. These are related to uncertainties around cash upstreaming from Nigeria, the timing of asset sale proceeds and Covid-19 impacts. During this transition, the board anticipates paying a total ordinary dividend of at least ZAR 2.60 per share for the 2021 financial year. In addition, MTN plans to invest ZAR 29.1 billion in the network, fintech and digital services platforms in 2021, which the company said is a slight increase from 2020.
