MTN Rwanda rebound puts a smile on Crystal Telecom shareholders again

Iza Irame, the chief executive of Crystal Telecom (left), and Bart Hofker, the chief executive of MTN Rwanda, at Crystal Telecom Fourth Annual General Assembly Friday morning. Sam Ngendahimana.

Crystal Telecom has recovered from a slump it suffered in 2017, which saw its shareholders miss out on a dividend payout last year.

The company has announced it registered a profit of Rwf1.5 billion in 2018, earning its shareholders dividends amounting to about Rwf1.2 billion.

Crystal Telecom, which holds a 20 per cent stake in MTN Rwanda which it has floated on the local bourse, saw a turnaround in its fortunes after MTN Rwanda registered Rwf7.7 billion in profit after tax in 2018.

This represented a major rebound from the loss of Rwf8.5 billion it had incurred in 2017, largely owing to hefty fines by the regulator and tax authorities.

Shareholders in the meeting

In 2017, Rwanda Utilities and Regulatory Authorities and Rwanda Revenue Authority slapped a combined Rwf15.5 billion on MTN Rwanda for breach of terms of service and discrepancies in tax declarations.

But the firm has since bounced back, with its bosses mainly attributing last year’s strong performance to growth in airtime, mobile money and data traffic.

Crystal Telecom 's Chairperson of the Board of Directors Evlyn Kamagaju addresses the meeting yesterday

In 2016, MTN Rwanda made a profit of Rwf5.5 billion, with Crystal Telecom taking Rwf1.03 billion in profit after tax.

And, with both companies recording more profits in 2018 than when they had last made a profit prior to the 2017 fiasco, optimism is high among shareholders.

Iza Irame, the Chief Executive of Crystal Telecom, told Saturday Times on Friday that they were content with the rebound of MTN Rwanda and expect continued growth.

She was speaking shortly after the 4th annual general meeting of Crystal Telecom in Kigali.

Bart Hofker, the Chief Executive of MTN Rwanda gives some clarification at Crystal Telecom Annual General Assembly Friday morning, Sam Ngendahimana

During last year’s annual general meeting, shareholders demanded greater compliance with all national laws and regulations, warning that breaches that attracted hefty fines were not only costing them dividends but also led to a drop in the share value. 

Crystal Telecom has two seats on MTN Rwanda board of directors, including the position of chair. 

With the local stock market still at the nascent stage, Irame said that continued positive performance and public awareness will serve to build public confidence in investing in the firm.

“At the moment we can say that MTN Rwanda is a strong business and we expect continued growth,” she said. “As a listed company, we endeavour to provide as much information as possible and encourage the public to invest.”

Despite the profits, however, Crystal Telecom will not be diversifying its business beyond the MTN shares in the short-term, she said, noting that the firm remains a special purpose vehicle to allow the general public to acquire a stake in MTN Rwanda.

Bart Hofker, the chief executive of MTN Rwanda, said the firm has had a good first quarter of 2019 and was projecting continued positive performance throughout the year. 

Voice remains the biggest driver of growth for the telecom firm with mobile money services and data following closely. 

MTN Rwanda says it will also soon roll out more innovations to further help grow its revenues.

Meanwhile, Hofker said MTN has taken measures to ensure full compliance to national laws to steer clear of such situations as that of 2017 when they were slapped with heavy fines. 

Average consumption per client for MTN services is estimated at $2 per month.

Celestin Rwabukumba, the chief executive of Rwanda Stock Exchange, said the telecom company’s recovery was a positive development, especially as it will help build confidence in the local market.

He welcomed MTN Rwanda’s move to put in place more stringent compliance measures, saying that it will ensure that shareholders get returns on investment.

Meanwhile, Friday’s Crystal Telecom shareholders meeting passed a gross dividend payout of Rwf4.52 per share, albeit subject to withholding tax at a rate of 5 per cent for East African Community citizens and 15 per cent for non-EAC shareholders.  

The meeting also approved Richard Tusabe as a new member of Crystal Telecom board of directors, replacing John Bosco Sebabi.