MTN takes more Nigeria forex pain

MTN reported poor results for the first quarter of 2024, as the Nigerian naira weakness continues to weigh on the company’s operations.

MTN released a quarterly update for the period ended 31 March 2024 today, which revealed a weak performance.

“The macro environment in the first quarter of 2024 remained challenging with ongoing high inflation as well as local currency devaluations in some of our key markets,” said CEO Ralph Mupita. 

The telecoms giant reported group service revenue of R42.90 billion for the quarter, down 18.8% compared to the first quarter of 2023.

This was largely due to a 52.8% decline in revenue from Nigeria, which was impacted by the country’s weak currency. In constant currency terms, group service revenue grew by 11.1%.

MTN said it invested capex of R5.4 billion year-to-date in its networks and platforms, with a capex intensity of 11.8% in the period. 

This drove data traffic and fintech transaction volumes growth of 36.2% – up 32.2% excluding JVs – and 18.3%, respectively.

MTN’s subscribers increased by 3 million to 287.6 million in the quarter, with base growth hampered by subscriber registration regulations in Ghana and Nigeria, as well as a decline in subscribers in Sudan amidst the ongoing conflict. 

Active data subscribers were up by 7.8% to 149.2 million, supporting increased traffic and data revenue growth.

Overall, group EBITDA increased by 3.9%, with the EBITDA margin declining by 2.5 percentage points to 38.1%. 

The EBITDA margin 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 South Africa and the impact on operations from the conflict in Sudan. 

Mupita said that, in Nigeria, the company 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.

“Global geopolitical tensions remained elevated and a factor impacting our performance. This included the ongoing civil war in Sudan, which severely affected network availability and revenue generation in our business in that market,” he said. 

“We were also impacted by cable cuts that resulted in downtime for significant subsea cables connecting the African continent, particularly in West Africa.”

While still elevated, Mupita said the company is encouraged by the abating trend in the blended rate of inflation across its footprint, which reduced to 13.7% in Q1 2024, compared to 18.5% in Q1 2023.