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Making sense of MTN Uganda’s approved Ushs 238 billion Capital Expenditure for 2016

August 21, 2016

2407

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Innocent Kawooya.

Every now and then, your favorite media present complex yet summarized financial figures of either a company’s annual performance or its committed investment budget for a particular period.

While most times, the media reports accurately about the released figures, they rarely take any initiative to break the financials down for all their readers/viewers/listeners. Most reporters work on the erroneous assumption that their audiences are well learned and thus can crack the math for themselves. Many times, they are wrong!

At the end of last week, MTN Group released its Performance Report highlighting 2015 achievements and challenges. The MTN Group announcement was followed by performances at country level.

On Friday 4^th March, MTN Uganda released a detailed report of its 2015 performance at a press conference held at MTN Towers, Hannington Road and attended by several media houses. To those that attended the conference, it was so detailed with MTN Uganda CEO Brian Gouldie taking time to ‘breakdown figure by figure, explain word by word’.

However, a few days after this generous declaration, most, if not all of the articles published are either ‘re-publishing the issued press release or giving a summarized performance figures, beefed up with a few quotes here and there.

Two things; One, the stories are authentic as they contain the right figures and also quote MTN Uganda Executive members. Two, these stories lack some much needed detail and depth. If it was a lunch out, the writers have served their audiences bony meat.

A common man out there would wish to have a clear and localized understanding of MTN Uganda’s financial performance backed up with examples that he is well familiar with.

There is no rocket science about this. Let’s cut the jargon short and hit the road.

In 2016, MTN Uganda will directly spend Ushs 238 billion on Capital Expenditure (CAPEX), Ushs 2 billion less than its 2015 CAPEX. Mr Gouldie noted that this money will be invested in “predominantly data network, Information technology required for the development of new products and services and facilities investment including a major re-development of our head office property.”

According to www.investopedia.com ; also referred to as CAPEX, Capital expenditure are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm.

Together, let’s understand the greatness of MTN Uganda’ 2016 committed investment.

The current average retail price of a Sugar kilogram is Ushs 3500. If it was to buy sugar, the Ushs 238 billion that MTN Uganda has earmarked for 2016 would buy 68,000,000 million kilograms. At the end of 2015, Uganda’s population stood at about 40 million people. MTN Uganda would use its 2016 Capital Expenditure to buy each Ugandan a kilogram of Sugar and remain with another 28,000,000 kilograms untaken.

Let us talk Boda Bodas (Motor Bikes). Today a brand new Bajaj Boxer motorbike goes for about Ushs 3.7 million. MTN Uganda’s Ushs 238 billion Capex for 2016 can buy 64,324 brand new motorbikes. In a day, each Boda Boda rider takes to the owner an average of Ushs 10,000. 64,324 motorbikes would give MTN shareholders Ushs 643,240,000 daily. In 30 days, the shareholders would have Ushs 19 billion and Ushs 192 billion in 10 months! This excludes the money each rider would have earned during the same period.

That’s the magnitude of MTN Uganda’s 2016 approved Capital Expenditure.