MTN feels the pain

Despite solid underlying results, MTN posted its first loss since 2016 as it took another forex hit from its Nigerian operations.

MTN released its results for the first half of 2024 today, which revealed growth in its South African operations but a major downturn in its Nigerian business.

The telecoms giant reported a 20.8% decline in group service revenue due to a 52.9% decline in revenue from Nigeria. Its South African operations grew service revenue by 3.3%.

In constant currency terms, group service revenue grew by 12.1%.

The company’s EBITDA in South Africa was up 4.3%, but a 68.3% decline in Nigeria saw group EBITDA fall by 41.2%.

MTN saw total subscriber growth of 0.8% to 288 million customers, with active data subscribers growing by 9.2% to 150.2 million.

The company’s headline earnings per share (HEPS) decreased by 198.5% to a loss of 256 cents per share.

Basic earnings per share saw an even bigger decline of 278.6%, which brought the company to a loss of 409 cents per share.

The company said HEPS was negatively impacted by some non-operations and once-off items. These include: 

• Hyperinflation adjustments of -57 cents
• Foreign exchange losses of -519 cents, which include a naira depreciation impact of -389 cents 
• Deferred tax charge/asset reversal of -28 cents 
• Other non-operational items of -25 cents 

MTN’s return on equity declined by 4.2 percentage points to 20.2%.

The company explained that strong commercial momentum underpinned solid growth within its portfolio.

However, MTN said its resilient underlying performance was masked by macro impacts on its financials.

“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) and 18.0%, respectively,” said CEO Ralph Mupita.

“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 focused on reducing its exposure to US dollar-denominated obligations.” 

“In the period, we rolled out 1,556 4G and 829 5G sites. Our focus on network quality and competitiveness has underpinned the NPS position in our consolidated markets.”

He said 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,” Mupita said.

Although the underlying commercial momentum and strategy execution were solid in the period, Mupita acknowledged that macro headwinds impacted operating results. 

He said the further devaluation in the naira against the US dollar, the translation impact on reporting currency (rands) of the naira and the ongoing conflict in Sudan had the most significant impact on reported results.

“Notwithstanding, we are encouraged by the strong operational performance in other key markets in H1,” he said. 

“MTN South Africa, which completed its network resilience plan in the period, demonstrated encouraging progress in key areas of the business.”

“This helped to drive some acceleration in overall service revenue.”

He added that MTN Nigeria delivered a strong reported underlying performance despite the severe macro impacts on its financial performance. 

MTN did not declare an interim dividend.