MTN said the macroeconomic impacts from the conflict in the Middle East may, for African countries, extended beyond a cessation of hostilities in that region.
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Telecoms group MTN’s share price fell hard by 4.1% on the JSE Tuesday, even after reporting a strong first quarter financial performance, with service revenue up 21.1% in the three months to March 31.
The share price was trading 4.1% lower at R206.83 on Tuesday morning, even though it has steadily lifted from R119.50 over a year.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 27.9% over the three month period. The number of subscribers increased 5.4% to 312.7 million. Data revenue increased by 35.4%, and fintech revenue was up 20%. Active data subscriber numbers increased by 8.7% to 175.6 million.
The conflict in the Middle East and the impact on oil prices and availability, food prices, and broader inflation would be monitored, as well as foreign exchange rates for the group’s markets, MTN's directors said in a quarterley update.
They warned that the potential impacts could continue well beyond any potential end of hostilities.
There had been a more supportive macroeconomic and foreign exchange backdrop in key markets like Ghana, Nigeria, and Uganda. Average exchange rates of the currencies in most of the markets in which the group operates were weaker against the rand, while the Nigerian Naira was stronger over the period.
The group invested R9.6 billion through the three months to sustain coverage and capacity of networks and to provide new products for consumers, homes, and businesses.
MTN SA service revenue increased by 0.7%, while its EBITDA margin fell by 4.1 percentage points (pp) to 32.6%.
MTN Nigeria's service revenue increased significantly by 41.7%, and its EBITDA margin was up by 8.7 pp to 55.3%.
MTN Ghana’s service revenue increased by 35.7%, and its EBITDA margin increased by 3.1pp to 61.2%. MTN Uganda’s service revenue was up 7.6%, and its EBITDA margin decreased by 1.8pp to 50.6%.
The group is actively moving towards separating its fast-growing fintech operations. MTN Ghana was the first market to announce the completed structural separation of its fintech business during the period.
MTN Nigeria obtained various governance approvals, and at the Nigeria AGM, shareholders voted in favour of the structural separation. The fintech separation in Uganda was awaiting regulatory approvals.
In Digital Infrastructure, the proposed IHS acquisition, announced in the quarter, would position the platform to unlock additional value from its tower portfolio and strengthen MTN’s leadership as the largest and "most comprehensive digital infrastructure provider" in Africa, they said.
During the period, the group also concluded an investment alongside leading global tech investors in ORAN Development Corporation, which specialises in AI-Native Radio Access Networks.
“This is aligned to our strategy, particularly our commitment to leverage Artificial Intelligence for growth,” the directors said in a statement Tuesday.
The group maintained healthy liquidity headroom of R42.6bn.
“With the start of execution of our Ambition 2030, we remain confident of the structural demand for data and fintech services that underpins our investment case,” the directors said.
Operationally, the focus was on maintaining the robust operating performance in MTN Nigeria and MTN Ghana, as well as accelerating the momentum seen in several other markets.
At MTN SA, initiatives to improve performance were being implemented, particularly in prepaid.
In the fintech platform, the focus was on scaling the ecosystem, deepening engagement, and completing the structural separation of indicated markets in Nigeria, Ghana, and Uganda.
Despite the macroeconomic and geopolitical uncertainties, the medium-term earnings guidance was maintained.
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