MTN South Africa service revenue declines, prompting a reduction in its capex target

MTN has released a quarterly update for the period ended March 31, 2024, revealing a sharp decline in service revenue for its Nigerian business.

MTN Nigeria reported 52.8% lower service revenue in Q1 2024 than in the same period last year.

It reported a group service revenue figure of R10.27 billion in Q1 2024, compared with R21.74 billion in Q1 2023.

At the same time, its earnings before interest, taxes, depreciation, and amortization (EBITDA) also declined sharply, from R11.6 billion in Q1 2023 to R4.1 billion in Q1 2023.

MTN Group CEO Ralph Mupita said ongoing high inflation and the devaluation of local currency in key markets like Nigeria impacted its financial performance.

“In Nigeria, we saw strong underlying commercial momentum in the business, despite the financial impacts of the sharp devaluation of the naira and continued elevated inflation during the period,” said Mupita.

The Nigerian naira’s value dropped significantly in the past year, hurting MTN Nigeria’s revenue in rand terms.

MTN said that in constant currency terms, service revenue in Nigeria grew by 31.8%, ahead of average inflation in Q1.

MTN said some favourable base effects helped the growth, but it underscored the continued demand for data, voice, and digital services.

This was driven by a 14.3% increase in voice revenue and a sharp 53.5% increase in data revenue.

MTN South Africa performed satisfactorily, reporting a 3% increase in service revenue year over year.

It reported group service revenue of R10.4 billion in Q1 2024 in South Africa, up from R10.1 billion in Q1 2023.

However, EBITDA declined slightly from R4.55 billion to R4.52 billion.

Regarding the MTN Group’s overall performance, service revenue declined by 18.8% from R52.8 billion in Q1 2023 to R42.9 billion in Q1 2024.

EBITDA also declined from R24.26 billion to R17.29 billion. Mupita noted that the group’s EBITDA margin decreased by 2.5pp, which resulted from several factors.

“This was impacted by upward pressure on costs due to inflation and forex depreciation mainly in Nigeria, network resilience costs and electricity tariff escalations in MTN SA and the impact on operations from the conflict in Sudan,” said MTN Group CEO Ralph Mupita.