MTN Group, Africa’s largest mobile operator and a company listed on the Johannesburg Stock Exchange (JSE), reported an 18.5% decline in revenue for the third quarter (Q3) of 2024. The company released its Q3 results today, highlighting several key financial metrics and operational developments.
Revenue and Financial Performance
The telecom giant experienced a significant drop in voice revenue, which fell by 31.3%. Data revenue also saw a decline, decreasing by 15.3%. MTN attributed these declines to challenging macroeconomic and regulatory conditions across the 17 markets in which it operates.
Positive Growth Areas
Despite the overall revenue decline, MTN reported growth in its fintech segment. Fintech revenue increased by 8.5%, driven by a 17.4% rise in fintech transaction volumes, which reached 14.9 billion transactions. Additionally, the total number of subscribers grew by 1.6%, bringing the total to 288 million. Active data subscribers increased by 7.4%, reaching 152.8 million. Mobile Money (MoMo) monthly active users also saw growth, increasing by 5.7% to 61.5 million, and data traffic surged by 34.1% to 14,141 petabytes (PB).
CEO’s Statement
Ralph Mupita, MTN Group President and CEO, commented on the company’s performance, noting that MTN navigated a challenging macroeconomic environment and regulatory developments to deliver a resilient operating performance in the first nine months of 2024. He highlighted an encouraging deceleration in blended inflation and reduced currency volatility across markets in Q3 2024 compared to the first two quarters of the year.
Currency Impact
Mupita pointed out that blended inflation across MTN’s footprint eased to an average of 13.9%, down from 17.1% in the same period of 2023. The Nigerian naira continued to depreciate, closing the period at N1,541/USD (compared to N907 in December 2023), significantly impacting reported results. However, the naira was less volatile on a sequential basis in Q3 than in preceding quarters. The South African rand strengthened, ending September 2024 at R17.22 (compared to R18.27 in December 2023). The Ghanaian cedi weakened by 19.5% against the US dollar, while the Ugandan shilling strengthened year-to-date by 2.4%.
Capital Expenditure and Network Investment
MTN invested R19.8 billion in capital expenditure (capex) for its networks and platforms, reflecting a capex intensity of 14.7%, which is within the medium-term target range of 15% to 18%. This investment supported robust data traffic growth of 34.1% (37% excluding joint ventures) and increased fintech transaction volumes by 17.4%, underpinning MTN’s growth strategy.
Performance in Key Markets
MTN South Africa reported a 3.3% rise in service revenue. MTN Nigeria, MTN Ghana, and MTN Uganda also saw significant service revenue increases of 33.3%, 31.9%, and 20.1%, respectively. Excluding operations in conflict-hit Sudan, group service revenue growth was 14%, aligning with the mid-teen growth target.
Subscriber Base and Data Revenue
The subscriber base grew by 1.6% to 288 million by the end of September 2024, despite challenges such as subscriber registration regulations in Nigeria and a decline in users in Sudan due to conflict. 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%.
Fintech Services
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 advanced services revenue growing by 53.1%. The EBITDA margin within the fintech business improved year-on-year, reaching the top end of the targeted range of mid- to high-30%.
Group EBITDA and Cost Management
Overall group EBITDA increased by 3.4%, despite macroeconomic pressures such as elevated inflation, foreign exchange movements, and the conflict in Sudan. These pressures were mitigated by savings from successfully renegotiated tower lease contracts in Nigeria in August 2024.
Contractual Changes and Savings
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 also included an energy cost component indexed to the cost of providing diesel power, with discounts and incentives over the life of the contracts. As of the end of September, accrued operating expense savings from the effective date of the contract on 1 April 2024 amounted to approximately R603 million, with free cash flow savings of approximately R502 million.
Strategic Initiatives
Mupita highlighted progress on key strategic initiatives, including localisation efforts. In Q3, MTN achieved an additional 2.1% localisation in Ghana, bringing local shareholding in Scancom to 30%. This followed the successful sell-down of a further 7% in MTN Uganda in June 2024. MTN has exited Guinea Bissau as part of its portfolio optimisation and is working to complete the exit from Guinea Conakry.
Overall, MTN Group demonstrated resilience in the face of challenging conditions, with strategic investments and operational efficiencies supporting growth in key areas such as fintech and data services.
