MTN Group’s profits are hindered by the devaluation of the Nigerian naira and ongoing conflict in Sudan, with a reported 69% drop in HEPS year-over-year. Despite these challenges, CEO Ralph Mupita expresses optimism for recovery in Nigeria, supported by strategic initiatives such as renegotiated contracts and tariff increases. While South Africa showed resilience in service revenue, overall group earnings and EBITDA suffered significant declines, prompting a portfolio optimization strategy that includes exiting underperforming markets.
MTN Group’s financial performance has been adversely affected by the devaluation of the Nigerian naira and the ongoing conflict in Sudan, impacting profits over the past financial year. Headline earnings per share (HEPS) fell nearly 69% year-over-year through December 31, 2024, yet would have risen by 13.8% had currency rates remained constant. CEO Ralph Mupita remains optimistic about the company’s fundamental performance despite these challenges.
The significant devaluation of the naira has overshadowed MTN’s strong business performance. Mupita expressed optimism regarding Nigeria’s economic recovery, citing early indications of naira stabilization and decreasing inflation. The telecom operator is undertaking several strategic initiatives, such as renegotiating tower lease contracts, resulting in notable operational savings of R1.3 billion (approximately US$71.6 million), and adjusting mobile prices following regulatory approval for a tariff increase.
The conflict in Sudan has created severe operational challenges for MTN, resulting in prolonged hyper-inflation and disrupted services. The operational landscape remains difficult, fraught with outages and shortages, yet Mupita notes some network improvements since December 2024, with operations partially restored in the capital.
Overall, MTN’s group service revenue decreased by 15.4% to 177.8 billion rand ($9.8 billion), primarily due to a nearly 45% revenue drop in Nigeria. Conversely, South Africa displayed resilience with a service revenue increase of 3.1%, attributed to improved network reliability. South Africa contributed 24.3% of service revenue compared to Nigeria’s 22.9%, with other markets like Ghana and Uganda contributing smaller percentages.
Group earnings before interest, tax, depreciation, and amortization (EBITDA) fell by one-third to R60.1 billion ($3.3 billion), but would have increased by 10.2% with constant currencies. The group is committed to investing R30-35 billion ($1.7-1.9 billion) in capital expenditures in 2025, demonstrating its dedication to strengthening operational capacity despite market challenges.
MTN’s subscriber base grew by 2.2% year-over-year to 290.9 million across 16 markets, with net additions of 6.2 million customers, despite the decline in Sudan. Data traffic increased significantly, and active data subscribers reached 158 million. Fintech transactions surged, highlighting strong performance in this segment.
As part of a portfolio optimization strategy, MTN has exited underperforming markets, including Afghanistan and Guinea-Bissau, with a continued focus on local compliance and ownership. Mupita emphasized that despite ongoing macroeconomic uncertainties, MTN is strategically positioned to leverage growth opportunities and create value for stakeholders moving forward.
In summary, MTN Group’s recent financial performance has been challenged by the devaluation of the Nigerian naira and the conflict in Sudan, leading to a significant decline in profits. However, the company remains optimistic about recovery prospects in Nigeria and has undertaken initiatives to stabilize its operations while maintaining strategic growth in South Africa and other regions. The commitment to investment and positive market trends presents potential for future growth and value creation for stakeholders.
Original Source: www.connectingafrica.com
