MTN Group’s revenue decreased by 18.5% in the third quarter (Q3) of 2024.
The JSE-listed telecoms company, Africa’s biggest mobile operator, announced its Q3 results today, indicating that voice revenue dropped by 31.3%.
Data revenue decreased by 15.3%, with MTN saying it is navigating challenging macro and regulatory conditions in the 17 markets in which it operates.
On the positive side, MTN’s fintech revenue grew by 8.5%, with fintech transaction volumes increasing by 17.4%, to 14.9 billion.
Total subscribers increased by 1.6%, to 288 million, while active data subscribers went up by 7.4%, to 152.8 million.
Mobile Money (MoMo) monthly active users increased by 5.7%, to 61.5 million, and data traffic rose by 34.1%, to 14 141PB.
Ralph Mupita, MTN Group president and CEO, says in the first nine months of 2024, the firm navigated a challenging macro environment and regulatory developments to deliver a resilient operating performance.
According to Mupita, there was an encouraging deceleration in blended inflation and reduced currency volatility across markets in Q3 2024, relative to the first two quarters of the year.
Currency consequences
“Blended inflation across our footprint eased to an average 13.9%, compared to 17.1% in the same period of 2023,” he says.
“The naira continued to depreciate, closing the period at N1 541/US$ (December 2023: N907) and having a material impact on our reported results. However, the naira was less volatile on a sequential basis in Q3 than in preceding quarters. The rand strengthened, ending September 2024 at R17.22 (December 2023: R18.27). While the cedi weakened by 19.5% against the US dollar, the Ugandan shilling strengthened YTD by 2.4%.”
Mupita points out that MTN invested capex of R19.8 billion in its networks and platforms, reflecting capex intensity of 14.7% – compared with the medium-term target range of 15% to 18%.
This helped to support the robust data traffic growth of 34.1% (37% excluding joint ventures) and fintech transaction volumes (up 17.4%) that underpin MTN’s growth thesis, he notes.
In terms of key markets, MTN South Africa reported a 3.3% rise in service revenue, while MTN Nigeria, MTN Ghana and MTN Uganda’s service revenue increased by 33.3%, 31.9% and 20.1%, respectively.
Excluding the operation in conflict-hit Sudan, group service revenue growth was 14%, which is in line with the mid-teen growth target, Mupita states.
“Our subscriber base grew by 1.6% to 288 million by the end of September 2024, affected by subscriber registration regulations in Nigeria and a decline in users in Sudan, where millions of people have been displaced by the conflict in that country.
“The underlying expansion of the subscriber base was 4.3% when adjusted for Nigeria and Sudan. Overall, the group’s active data users increased by 7.4% to 152.8 million (up 7.9% excluding joint ventures), supporting data revenue growth of 21.3%.”
Demand for fintech services remained strong, with the number of active MoMo users up by 5.7%, to 61.5 million (excluding over-the-counter customers).
“Fintech revenue increased by 28.9%, with continued pleasing development of advanced services revenue, which grew by 53.1%. The EBITDA [earnings before interest, taxes, depreciation and amortisation] margin within the fintech business improved on a year-on-year basis, to the top end of our targeted range of mid- to high-30%,” Mupita says.
“Overall group EBITDA increased by 3.4%, with a number of macro factors putting upward pressure on our costs – these included elevated inflation, foreign exchange movements and the conflict in Sudan. These pressures were mitigated by savings derived from the successfully renegotiated tower lease contracts in Nigeria in August 2024.”
Contractual changes
He reveals that the revised terms with IHS in Nigeria reduced the US dollar-indexed component of the leases linked to a discounted US consumer price index and removed technology-based pricing, ensuring payments for new upgrades will be based on tower space and power usage.
The renegotiated agreements incorporate an energy cost component indexed to the cost of providing diesel power; however, the terms also include discounts and incentives over the life of the contracts, he explains.
In the current period, the accrued operating expense savings from the effective date of the contract on 1 April 2024 was approximately R603 million, as at the end of September, and free cash flow savings amounted to approximately R502 million.
“Also supported by the ongoing progress made with our group-wide expense-efficiency programme, the overall EBITDA margin narrowed by 3.2pp to 37.3%.”
Describing progress on key strategic initiatives, Mupita says: “We continued to advance our strategic priorities, including our localisation initiatives.
“In Q3, we achieved an additional 2.1% localisation in Ghana, bringing the local shareholding in Scancom to 30%. This followed the successful sell-down in June 2024 of a further 7% in MTN Uganda. We have now exited Guinea Bissau, as part of our portfolio optimisation, and work is under way to complete the exit from Guinea Conakry.”
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