Telecom giant MTN Uganda has warned that the new tax on digital cash transactions is a setback to financial inclusion.
Speaking during annual general meeting for stakeholders on Friday, 19 May 2023 in Kampala, MTN Uganda Chief Executive Officer Sylvia Mulinge said the tax will affect mobile money usage yet the service is crucial to bringing more Ugandans into the money economy.
According to Mulinge, the tax is unfair given that other digital money business players are not affected by the tax that targets mobile network operators. She also urged the government to work on the taxes on mobile gadgets especially smartphones to cut down prices and improve market penetration.
The government is currently levying a 0.5 percent tax on mobile money cash withdrawals, arguing that it is aimed at discouraging the conversion of cash from digital to paper, and encourage the drive to a ‘cashless economy’.
Mulinge said they will continue to press the government to remove the tax that she called ‘punitive’ to the Uganda consumers who use mobile money services.
While presenting the MTN annual financial results, it was revealed that the Group’s annual profit after tax rose 20 percent to 491 billion shillings during the year.
During the AGM, shareholders voted and approved the 5.5 shillings per share as dividend for the first quarter of this year, which brings the total annual dividend for the past one year to more than 15 shillings per share.
The Chairman of the Board Charles Mbiire said the total of 123.1 billion Shillings to be paid out to the shareholders next month, resulted from their performance.
Andrew Bugembe, the Chief Finance Officer said they will continue paying out dividends three times a year, and maintain the policy of paying out a dividend equivalent to least 60 percent of their earnings.
Bugembe also described their performance that show a growth of 11 percent in revenues, as commendable considering the economic environment that characterized the year.
Growth was mainly driven by the growth in the number of subscribers, which the company put at 17.8 million as of the end of March 2023.
The growth, however, is being affected by the continued slowdown in voice revenues unlike in the data and mobile money segments.
Bugembe says that considering that 2022 was the first full year the economy was fully opened; the performance is commendable.
During the AGM, concern was raised regarding the value of the shares on the stock market, which have dropped to 165 shillings per share, from the Initial Public Officer (IPO) price OF 200 Shillings.
On the day of first trading in December 2021, the price went up to 205. The concern was whether it was really true that the company was making profits, or if so, why the price was falling.
Bugembe explained that the underperformance of the share was not because of the profitability of the company, but other market forces.
MTN Uganda is currently the second most valuable stock on the USE with a market capitalization of 3.7 trillion shillings, or about 20.6 percent of the entire size of the Uganda Securities Exchange market.
On Thursday, it closed trading at 165 shillings per share on the USE, meaning that it has lost about 8.33 percent since the year began.
Over the past three months, it has been the third most traded stock with 16.9 million shares worth 2.86 billion shillings traded.
Mulinge hopes that the economic situation will continue improving from last year, which was characterized by high inflation, high fuel prices, high foreign exchange rates, among others, which she says, affected consumer spending power.
