In South Africa, the operating environment for telecom companies such as MTN has been fraught with low consumer disposable incomes, the impact of load shedding and higher inflation. Picture: Bongani Mbatha/ Independent Newspapers.
MTN expects South African headwinds to persist after recording a 12.1% dip in voice revenues for its home market which, after battling inflation, and currency issues in Nigeria, brought down the telecom’s profitability for 2023 by as much as 72.3%.
In South Africa, the operating environment for telecom companies such as MTN has been fraught with low consumer disposable incomes, the impact of load shedding and higher inflation.
MTN said on Monday that “the operating environment is expected to remain challenging” in South Africa, “with the economic growth outlook muted and persistent pressure on consumer disposal” incomes.
“Across our markets, inflation rates and interest rates may stay elevated. Tariff increases for voice and data will be required in the period ahead to mitigate network-related expenses, and these will require regulatory approval across several markets,” said CEO Ralph Mupita.
Service revenue for MTN South Africa increased by a marginal 2.5% in the year ended December 31, with outgoing voice revenue lower by 12.1% and data revenue 7.4% firmer.
“MTN SA delivered a resilient performance in a challenging FY 2023, with an attestable quarterly recovery in key indicators, demonstrating the benefits of its investment in network resilience,” said MTN’s directors yesterday.
It explained that data remained the primary driver of growth, accounting for 47.8% of its South African revenues. Data subscribers in South Africa grew by 8% to 20.4 million.
For MTN SA, prepaid data subscribers now consume an average of 3GB of data per month. Postpaid data subscribers use about 16.5GB of data per month.
At group level, MTN said ongoing volatility in regional markets were also presenting “increased headwinds” and “material uncertainty” to the outlook. In 2023, MTN group revenue grew by 6.9% to R210.1 billion.
Group earnings before interest, tax, depreciation and amortisation dipped 0.5% to R90.5bn, with the Ebitda margin of 41.5% for the year “affected largely by higher inflation and the effects of foreign currency” devaluations.
These impacts were moderated through expense efficiency programmes, which realised savings of R2.6bn for the year – exceeding the 2023 target of R1.5bn, said the company.
Despite this, MTN reported a 72.3% plunge in headline earnings per share to 315 cents, against the backdrop of a devaluation in the Nigerian naira.
MTN suffered foreign exchange losses of R20.9bn from its Nigeria operations, including a R10.6bn loss in unrealised forex losses on leases.
Nonetheless, MTN Nigeria’s revenue contributed 34% to the total group revenue in the period.
MTN’s adjusted return on equity increased by 0.2 percentage points to 24.4%, with its subscribers increasing by 2.0% to total 294.8 million as at December 31, 2023.
MTN declared a final dividend of 330c per share. Its shares on the JSE were marginally higher by 1.42% in afternoon trade to about R91.64.
MTN raised active mobile money (MoMo) by 5% to 72.5 million, “impacted by a strategic shift in focus to wallet customers in Nigeria and base clean-ups” in Côte d'Ivoire and South Africa.
It described the momentum in volume and value of MoMo transactions as strong, having surged by 32.2% and 47.4% respectively.
Transaction values paced up to $272.1bn, while the total value of merchant payments made through MoMo rose by 46.1% to $16.1bn on a year on year basis.
MTN group’s MoMo agents and merchants grew by 5.4% and 42.5% to 1.3 million and 2.1 million respectively.
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