MTN Group, Africa’s biggest mobile operator, has reported huge losses in the first half (H1) of 2024.
The mobile operator today announced its interim financial results for the six months to 30 June, revealing that group service revenue decreased by 20.8% to R85.3 billion (H1 2023: R107.7 billion).
Earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased by 41.2% to R29 billion (H1 2023: R49.4 billion).
The firm notes the EBITDA margin was lower by 11.6 percentage points) to 32%, while basic earnings per share decreased by 278.6% to 409 cents per share (cps). Reported headline earnings per share (HEPS) decreased by 198.5% to 256cps.
According to MTN, it has 288 million customers in 18 markets. Of these, it notes, 150 million were active data subscribers – up more than 9% – “who lifted data traffic on MTN’s network by more than a third to 9 054 petabytes”.
During the previous reporting periods, the South African-domiciled MTN faced challenges in its Nigerian operations, the mobile operator’s biggest market.
The company cited the decline in value of the Nigeria naira and inflation as its biggest undoing in the West African country.
MTN Group president and CEO Ralph Mupita is, however, putting on a brave face amid the revenue and earnings decline, saying he is encouraged by the company’s underlying operational momentum. He adds that the H1 results were achieved in a challenging operating environment.
Mupita says the strong underlying performance was masked by the impact of weaker currencies – most particularly the naira against the rand – as well as the ongoing conflict in Sudan.
Sustained headway
“MTN delivered a solid underlying performance in H1 2024, with pleasing progress in some key markets. This result, achieved against a challenging macro backdrop, was underpinned by the continued execution of our commercial initiatives and Ambition 2025 strategy.
“The momentum of our business was reflected in the continued growth of our ecosystem, with data traffic and fintech volumes up by 35.7% (36.7% excluding JVs [joint ventures]) and 18%, respectively. In H1, we deployed R13.4 billion of capex, reflecting a capex intensity of 14.8%, largely reflecting lower spend by MTN Nigeria, as the opco [operating company] focused on reducing its exposure to US dollar-denominated obligations.”
According to Mupita, in the period, the mobile operator rolled out 1 556 4G and 829 5G sites. “Our focus on network quality and competitiveness has underpinned the NPS [net promoter score] position in our consolidated markets.”
He explains that the firm’s subscriber base ended the period at 288 million, with headwinds from subscriber registration regulations in markets such as Ghana and Nigeria, the decline in subscribers in Sudan amid the ongoing conflict and the firm’s exit from Afghanistan.
In terms of momentum, he notes, the underlying growth in the customer base excluding Sudan and Afghanistan was 3.2% year-on-year – 3.1 million net additions in the period.
Active data subscribers were up 9.2% to 150.2 million (up 10% excluding JVs), while Mobile Money (MoMo) monthly active users (excluding over the counter customers) rose by 10.6% to 62.6 million.
At 66 million, the number of active MoMo users was also more than 9% higher, boosting MTN’s fintech transaction volumes by 18% to 9.7 billion in the period, says the firm.
To support this continued acceleration in demand, MTN committed over R13 billion in capital expenditure to expand its 4G and 5G networks and business IT systems, it adds.
The group’s balance sheet remained strong, with the holding company leverage ratio at 1.6x, and an improved mix of US dollar debt to rand debt at 22:78, well within the target mix of 40:60, it states.
Adds Mupita: “Although the commercial momentum and strategy execution were solid in H1, macro headwinds impacted reported results. The sharp devaluation of the naira over the period had the most significant impact on reported results.
Strengthened network
“MTN South Africa, which has now completed its network resilience investment, demonstrated encouraging progress from Q1 24 to Q2 24 in terms of topline growth and earnings,” he says.
He adds that the investment positioned it to provide an average network availability of more than 95% under stage six load-shedding.
Mupita points out that at the end of June, network availability was 99%, supported by reduced load-shedding in Q2 24.
“MTN Nigeria delivered a strong underlying performance, despite the severe macro impacts on its financial performance,” Mupita says.
He notes good progress in key initiatives, including acceleration of revenue, optimisation of capex and the reduction of its US dollar-denominated obligations.
MTN Nigeria recently concluded the re-negotiation of its tower contracts with IHS and ATC. The company believes the revised contracts will support earnings and cashflow development in the business as part of the initiatives to resolve the negative equity position of MTN Nigeria.
According to the company, discussions around tariff increases for voice and data continue with the authorities in Nigeria.
“We will continue on the execution of our Ambition 2025 strategy to drive growth and unlock value for all stakeholders over the medium-term,” says Mupita. “The near-term macro backdrop continues to be challenging across our markets; GDP, inflation and currencies are expected to improve into 2025 across key markets.”
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