MTN Group resilient in face of forex volatility, elevated inflation

MTN head office

Photo by Bloomberg

7th November 2023

By: Natasha Odendaal

Creamer Media Senior Deputy Editor


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Telecommunications multinational MTN Group on Tuesday posted an increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) for the nine months to September 30, 2023.

Maintaining a resilient performance in the first nine months of 2023 amid elevated inflation rates and foreign exchange (forex) volatility, overall group Ebitda increased by 11.2%, on a constant currency basis and before one-off items, to R70.31-billion, said MTN Group president and CEO Ralph Mupita.

On a reported basis, the year-to-date Ebitda increased 2.8%.

South Africa’s Ebitda for the period under review contracted 5.7% to R13.87-billion, while Nigeria reported growth of 17.6% to R30.31-billion.

The group’s Ebitda margin contracted from 44.2% in the nine months to September 2022 to 43.2% in the nine months to September 2023, impacted by upward pressure on costs owing to inflation and forex depreciation, network resilience costs in MTN South Africa and the impact on operations of the conflict in Sudan.

Inflation remained elevated across MTN’s markets, with an average blended rate of 17.3% year-to-date compared to 14.2% in 2022, while forex markets remained volatile in the period, with local currencies under pressure against the dollar and the availability of forex constrained particularly in Nigeria.

The rand closed in September 2023 at R18.90 to the dollar, compared with R17.05 in December 2022, while the naira closed at N777 to the dollar, compared with N461 in December 2022.

“These impacts were partially mitigated through our expense efficiency programme, which achieved sustainable cost savings of R1.5-billion year-to-date, achieving our target for 2023,” said Mupita.

Power outages in South Africa continued to be a challenge in the period, with 273 days of loadshedding in the first nine months of the year, compared with 117 days in the same period of 2022.

MTN noted that, in the third quarter of 2023, there were 92 loadshedding days, compared with 55 days in the third quarter of 2022.

However, MTN has improved its network resilience, with average network availability above 95% at the end of September 2023 from just above 90% three months earlier.

During the nine months under review, group service revenue increased 14.2% to R156.31-billion on a constant currency basis, driven by growth of 2.6% from MTN South Africa, 21.4% growth in MTN Nigeria and 36.6% growth in MTN Ghana.

The third quarter service revenue growth, which increased 12.3%, was impacted by the conflict in Sudan. Excluding MTN Sudan, the group service revenue growth in the third quarter would have been 13.9%.

Meanwhile, group voice revenue increased 4.3%, group data revenue increased 23.1% and group fintech revenue increased 22.1% during the nine months under review.

Fintech volume of transactions increased 33.9% to $12.7-billion, while the value of transactions surged 57.1% to $203.7-billion.

MTN Group’s subscriber base increased by 1.8% to 290.1-million, impacted by subscriber registration regulations in Ghana and Nigeria and a decline in subscribers in Sudan amid the ongoing conflict.

Active data subscribers were up by 6.7% to 144.6-million, supporting increased traffic and data revenue growth, while Mobile Money active users increased by 0.7% to 63.5-million impacted by a strategic focus shift from agent banking to wallet in Nigeria and the implementation of a change in definition of activity across the group that impacted Côte d’Ivoire and South Africa adversely.

During the nine months to September 30, 2023, MTN reported capital expenditure (capex) of R26.2-billion across its networks and platforms.

“The capex intensity of 15.9% achieved in the period is within our medium-term target range of 15% to 18%,” said Mupita, noting that MTN Group is on track to deploy capex broadly in line with its 2023 guidance of R40.1-billion, based on current currency assumptions.

“We continue with focus on our strategic priorities of exiting selected markets in our current portfolio, completing the minority investment in Group Fintech with Mastercard and liability management of Holdco debt.”

The process to exit Afghanistan is in the regulatory approval stages, while discussions are ongoing regarding the potential orderly exit of three of MTN’s smaller operations in West Africa, namely MTN Guinea-Bissau, MTN Guinea-Conakry and MTN Liberia.

Edited by Creamer Media Reporter



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