MTN forex saga continues

MTN’s results have again taken a hit from foreign exchange movements, with the company reporting an 18.5% decline in service revenue.

MTN released a quarterly update for the third quarter of its 2024 financial year on Thursday, which showed that foreign currency fluctuations continued to impact the telecom giant.

However, there were some silver linings, with MTN reporting reduced currency volatility and a strong underlying performance.

In the first three quarters of its 2024 financial year, MTN’s performance has suffered from volatile currencies like the Nigerian naira, which saw the mobile operator make its first loss since 2016.

In the third quarter of its 2024 financial year, MTN’s service revenue declined by 18.5% but grew by 12.9% in constant current.

The company’s total subscribers grew by 1.6% to 288 million, and active data subscribers increased by 7.4% to 152.8 million.

In South Africa, MTN’s year-to-date results, which cover the first nine months of its 2024 financial year, show a 3.3% increase in service revenue year-on-year.

In Nigeria, service revenue declined by 48.7% for the same period but grew by 33.3% in constant currency.

Foreign exchange movements also impacted Ghana, as its year-to-date service revenue grew by 5.7% but increased by 31.9% in constant currency.

“In the first nine months of 2024, MTN Group navigated a challenging macro environment and regulatory developments to deliver a resilient operating performance,” said CEO Ralph Mupita. 

“There was an encouraging deceleration in blended inflation and reduced currency volatility across our markets in Q3 2024 relative to the first two quarters of the year.”

He said blended inflation across MTN’s footprint eased to an average of 13.9% compared to 17.1% in the same period of 2023. 

The Nigerian naira continued to depreciate, closing the period at ₦1,541/USD (December 2023: N907) and had a material impact on MTN’s results. 

However, he said the naira was less volatile on a sequential basis in Q3 than in preceding quarters. 

In addition, the rand strengthened, ending September 2024 at R17.22. While the cedi weakened by 19.5% against the US dollar, the Ugandan shilling strengthened YTD by 2.4%.

Despite these currency fluctuations, MTN delivered a solid operations performance and continued to invest in its business. 

The company invested capex of R19.8 billion in its networks and platforms, reaching a capex intensity of 14.7%.

MTN said this helped to support the robust data traffic growth of 34.1% and fintech transaction volumes, which were up 17.4%.

The company said its lacklustre subscriber growth was affected by subscriber registration regulations in Nigeria and a decline in users in Sudan, where conflict has displaced millions of people.

The underlying expansion of the subscriber base was 4.3% when adjusted for Nigeria and Sudan. 

“Although the macro environment is forecast to remain challenging in the near term, we are encouraged by the abating trends in inflation in our footprint, as well as reduced volatility in forex movements,” Mupita said.

“As these factors continue to normalise, we anticipate positive impacts on consumer spending power and our business operations.”

MTN expects total capex deployment for FY 2024 to fall within its guidance of R28 billion to R33 billion. 

This incorporates an expected uptick in MTN Nigeria’s capex in Q4 to support the increased traffic growth on the network being driven by stronger demand. 

“We will maintain our disciplined approach to capital allocation, focused operational execution, and strategic delivery in the final quarter of 2024,” he said. 

“Our overall medium-term guidance framework and anticipated ordinary dividend of 330 cents per share for FY 2024 remain unchanged.”