MTN Q1 performance muted on ongoing macroenvironment challenges

14th May 2024

By: Natasha Odendaal

Creamer Media Senior Deputy Editor


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JSE-listed MTN on Tuesday posted a dip in service revenue and earnings during the first quarter of the year, amid ongoing high inflation and local currency devaluations in some of its key markets.

The group reported a 28.7% contraction in earnings before interest, taxes, depreciation and amortisation (Ebitda) from R24.27-billion in the first quarter of 2023 to R17.3-billion in the first quarter of 2024.

MTN Nigeria’s Ebitda plunged 64.8% on a reported basis from R11.63-billion in the comparative prior period to R4.09-billion, while South Africa’s Ebitda decreased 0.8% to R4.52-billion.

On a constant currency basis, overall group Ebitda increased by 3.9%, while MTN Nigeria’s Ebitda decreased 1.9%.

The Ebitda margin declined 5.8 percentage points – a 2.5 percentage points decline on a constant currency basis – to 38.1%, impacted by upward pressure on costs owing to inflation and foreign exchange depreciation mainly in Nigeria, network resilience costs and electricity tariff escalations in MTN South Africa, and the impact on operations from the conflict in Sudan.

Group service revenue decreased 18.8% to R42.90-billion in the three months to March 31, 2024, with South Africa’s service revenue rising 3% to R10.41-billion and Nigeria’s service revenue declining 52.8% to R10.27-billion.

On a constant currency basis, group service revenue grew 11.1%, with MTN Nigeria reporting a 31.8% constant currency increase in service revenue during the quarter under review.

In MTN’s quarterly update for the period to March 31, 2024, MTN group president and CEO Ralph Mupita said that the company delivered a resilient performance in a challenging macroenvironment.

Despite the financial impacts of the sharp devaluation of the naira and continued elevated inflation during the period, MTN Nigeria saw strong underlying commercial momentum in the business, he continued.

Excluding MTN Sudan, which remains impacted by civil war conflict conditions and reported a 83.2% decrease, the group service revenue growth in the first quarter under review would have been 13.3%.

The group was also impacted by cable cuts that resulted in downtime for significant subsea cables connecting the African continent, particularly in West Africa.

“The macroenvironment in the first quarter of 2024 remained challenging with ongoing high inflation as well as local currency devaluations in some of our key markets. Although still elevated, we are encouraged by the abating trend in the blended rate of inflation across our footprint, which reduced to 13.7% in the first quarter of 2024, compared with 18.5% in the first quarter of 2023 and 15.4% in the fourth quarter of 2023.”

Meanwhile, MTN increased its subscriber base to 287.6-million, while active data subscribers increased by 7.8% to 149.2-million, supporting increased traffic and data revenue growth. Mobile Money active users increased 6.2% to 65.5-million.

“We invested capital expenditure (capex), excluding leases, of R5.4-billion year-to-date in our networks and platforms, with a capex intensity of 11.8% in the period. We drove data traffic and fintech transaction volumes growth of 36.2% and 18.3% respectively,” Mupita said.

However, MTN has revised down its capex deployment for 2024 to R28.33-billion, from the previous R35.39-billion, mostly owing to a reduction in expected spend by MTN Nigeria.

Despite this, MTN remains focused on its strategy execution to deliver on its medium-term guidance.

“Our trading environment is anticipated to remain challenging in the near term, with inflation remaining elevated in some of our key markets, local currencies under pressure and the civil war in Sudan expected to continue,” he said.

However, the medium- to longer-term structural growth opportunities for data adoption and financial inclusion remain strong.

“As such, we will continue to be guided by our capital allocation framework, manage near-term risks and remain focused on executing on our strategic priorities to deliver on our medium-term guidance.”

Edited by Creamer Media Reporter




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