MTN takes a hit – but sees signs of life in South Africa

MTN continues to feel the pain from its Nigerian operations, but the group is seeing some bright sports when it comes macro and regulatory conditions.

“In the first nine months of 2024, MTN Group navigated a challenging macro environment and regulatory developments to deliver a resilient operating performance,” said CEO Ralph Mupita in a quarterly update for Q3 2024.

“There was an encouraging deceleration in blended inflation and reduced currency volatility across our markets in Q3 2024 relative to the first two quarters of the year.”

Although the Nigerian naira continued to depreciate and had a material impact on the group’s results, it was less volatile on a sequential basis in Q3 than in preceding quarters.

The rand also strengthened, ending September 2024 at R17.22. (December 2023: R18.27).

“With a continued focus on our strategic priorities, we invested capex of R19.8 billion in our networks
and platforms, reflecting capex intensity of 14.7% – compared with our medium-term target range of
15-18%,” said Mupita.

“This helped to support the robust data traffic growth of 34.1% (37.0% excluding JVs) and fintech transaction volumes (up 17.4%) that underpin our growth thesis.”

The group’s overall service revenue grew by 12.9% in constant currency terms to R127 billion frim the R156 billion in Q3 2023.

However, amid Nigeria’s 48.7% decline in group service revenue, group service revenue declined by 18.5%.

The group’s subscriber base also grew by 1.6% to 288 million by the end of September 2024, which was affected by subscriber registration regulations in Nigeria and a decline in users in Sudan following the displacement of millions of people due to conflict.

The group’s EBITDA (before once-off items) reached R45 billion, which is a 35% decline from the R70 billion in Q3 2023. Nigeria was again the major dragger, seeing its EBITDA declining by 64% to R10 billion.

“Although the macro environment is forecast to remain challenging in the near term, we are
encouraged by the abating trends in inflation in our footprint, as well as reduced volatility in forex
movements,” said Mupita

“As these factors continue to normalise, we anticipate positive impacts on consumer spending power and our business operations.”

In South Africa, the group said that the macroeconomic landscape is showing signs of stabilising, and there is extreme optimism around the Government of National Unity following the national elections in May 2024.

That said, consumers are still facing many challenges, such as the ongoing pressures on disposable income and the elevated rate of unemployment.

“In this context, MTN SA will continue to focus its efforts on defending and growing the prepaid
segment, with data revenue growth, remaining a key priority,” said the group.

“The price increments made in prepaid are expected to take a few months to settle with our customers as they continue to optimise their consumption.”

“We thus envisage that the benefits of these adjustments will flow into improved service revenue growth in the coming quarters.”

“The base effects hampering prepaid data revenue growth in the near term are projected to normalise into Q1 2025, which should support an improvement in the development of the overall data segment thereafter.”

“Supplementing this, MTN SA will continue to drive its home initiatives, leveraging a mix of technologies to further enhance data growth.”

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