Here's Why MTN Is Cutting Down On Its Spending In 2020 Despite Revenue Growth In Q1

MTN Group has announced it is cutting down on its spending for 2020 amidst the coronavirus outbreak and economic fallout of the pandemic. MTN had budgeted $1.5 billion as its capital investment for this year, but the telecommunication company has now revised the budget downward.

The network provider has reportedly cut its spending from $1.5 billion to $1.1 billion, Bloomberg reported. The decision was made to enable MTN preserve cash and focus on maintaining its network. The downward review had come as a surprise as telecommunication firms have been able to cash-in on the COVID-19 pandemic, as the telecom sector has been less impacted negatively.

The telcos have seen strong growth in their voice and data revenue as demand surge following the lockdown that forced companies to initiate a work-from-home option. The lockdown period which varies across countries had also increased consumption of data as people seek entertainment online.

Allnews had reported that Nigerians spent N74 billion purchasing MTN Nigeria's data within three months of the first quarter of 2020. This was a significant growth compared to the N46.4 billion Nigerians spent on MTN's data between January to March last year. According to Bloomberg, from the end of February 2020, MTN experienced a surge in data-traffic in three of its biggest markets, South Africa, Nigeria and Ghana.

MTN Nigeria had also recorded growth in its Voice revenue, posting N194 billion for the three months period ended March 31, 2020. This is a climb when compared to the corresponding period in 2019 when the network provider grossed N182.4 billion. Speaking on the result, MTN Nigeria's Chief Executive Officer, Ferdi Moolman, had said, "We recorded a solid performance in the first quarter, building on the growth momentum we achieved in Q4 2019."

Also, its market rival, Airtel Nigeria had recorded 68.1% growth in its data revenue after grossing $435 million from data subscription, jumping from $259 million it recorded in the corresponding period of 2019. Airtel Nigeria also recorded growth in its voice revenue, after Nigerians splashed $850 million on calls compared to the $740 million recorded last year within the same period. The growth in call revenue represented 15.1% increase.

Meanwhile, Airtel Africa recorded a 13.8% growth in its revenue after increasing to  $3.4 billion this year, from $3.07 billion of the corresponding period of 2019.