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Asian Journal of Management
Year : 2019, Volume : 10, Issue : 3
First page : ( 263) Last page : ( 272)
Print ISSN : 0976-495X. Online ISSN : 2321-5763.
Article DOI : 10.5958/2321-5763.2019.00041.6

Empirical Evaluation of the Impact of Commercial KPIs on Financial Performance of MTN Ghana Ltd

Maka Bismark1,*, Prof. Dr Suresh N.2

1Ph. D. Scholar, M.S. Ramaiah University of Applied Sciences, Bangalore-560 054

2Ph. D. Supervisor, Faculty of Management and Commerce, M.S. Ramaiah University of Applied Sciences, Bangalore-560 054

*Corresponding Author E-mail: bdmakaus@yahoo.com

Online published on 3 January, 2020.

Abstract

This paper empirically examined the impact of commercial KPIs on financial performance of MTN Ghana Ltd. Time series data on the commercial KPIs was obtained from MTN database with data range spanning from January 2009 to December 2015. The commercial KPIs were carefully selected consistent with industry benchmarks. Using the DCC GARCH (Dynamic Conditional Correlation Multivariate Generalized Autoregressive Conditional Heteroskedasticiy) model to ascertain the volatility clustering and the conditional correlation between the commercial KPIs and financial performance, this study found that a high volatility in the financial performance of MTN Ghana Ltd is associated with high volatility in the independent commercial KPIs. The correlation coefficients are moderate and positive and are statistically significant as expected with number of revenue subscribers featuring prominently in its correlation with financial performance; to some extent consistent with the findings of Vadiraj and Narahari (2014)1. However, the data failed to reject the assumption of time invariant conditional correlation maintained in the Constant Conditional Correlation MGARCH model. This paper therefore concludes that there exist a constant conditional correlation between the commercial KPIs and financial performance overtime. For purposes of robustness, a 5-year rolling window regression was also estimated to lend support to the result showed by the DCC MGARCH model. The study finds that the true coefficients are constant, and the estimated coefficients portray a random fluctuation and noise. Interestingly, the number of revenue generating subscribers and minute of use maintained a strong positive causality with revenue performance over the entire 5-year rolling period. The result was consistent with the findings from the DCC GARCH model but there seems to be a puzzle since commercial KPIs such as Net Adds and Data volume exhibit a negative relationship with financial performance.

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Keywords

Commercial KPIs, Financial Performance, MTN Ghana, DCC MGARCH, Rolling Window Regression.

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