Load shedding costs MTN R695 million – as it gears up for stage 8

 ·13 Mar 2023

South Africa’s second-biggest mobile network estimated that load-shedding cost its South African operations R695 million in 2022 alone.

In the MTN Group annual results for 2022, the telecoms operator said that operating conditions were significantly impacted by national grid power availability worsening in the second half of the year.

“We estimate that the overall effect of load-shedding on topline and costs resulted in a negative impact of R695 million (or 3.4%) on MTN South Africa’s EBITDA (earnings before interest, tax, deductions and amortisation),” MTN said.

“Power supply in South Africa was an ever-increasing risk through 2022 with 208 days of load shedding – 146 of these in H2.

“This impacted not only network availability but also some business functions, which hampered our customers’ ability to recharge and upgrade their packages,” MTN added.

However, the company said it continued implementing a “comprehensive network resilience plan” to mitigate the impact of load-shedding, which began rolling in the second half of 2022 and is targeting its completion by May 2023.

“Our investment in this regard, which included dealing with vandalism and additional security on sites, put additional pressure on operating costs,” it stated.

In South Africa, MTN racked up R15.39 billion in capital expenditure in 2022 towards its tower infrastructure investments, which included backup batteries.

MTN has estimated to spend another R13.24 billion on capex in the country in 2023.

“Considering the increased frequency and intensity of stage 6 load shedding and the potential threat of stage 8, MTN SA is working with its partners on further optimising sites to ensure consistent performance of the resilience upgrades,” said MTN.

This will include the rollout of additional batteries, generators and “enhanced security features” to address an anticipated increased prevalence in load-shedding.

MTN noted that this optimisation process is expected to be concluded by December 2023.

“The anticipated higher frequency and intensity of lead shedding has impacted MTN SA’s outlook for both service revenue and costs,” the company stated.

Despite the severe load-shedding, MTN South Africa grew service revenue by 3.6% during the year, while data revenue increased by 13.1%.

EBITDA also increased by 4.7%, or 2.8%, when excluding the gain from selling MTN towers, while a dividend of 330 cents per share was declared – increasing by 10% compared to the 300 cps in 2021.

“MTN delivered a solid operating and financial performance in 2022 as we continued to execute our network resilience plan. We are pleased with the business’ continued resilience under challenging global and regional macroeconomic conditions,” said Group CEO Ralph Mupita

“However, given the higher-than-expected power and network security costs and a re-assessment of the management fee agreement with the Group, we are revising the targeted range for MTN SA’s EBITDA margin to 37-39% (previously, 39-42%),” He added.

Read: Standard Bank’s load shedding bill quadrupled last year

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