MTN South Africa’s market share gains support resilient MTN Group’s Q3 results

04 November 2022

Supported by the solid performance of large subsidiary MTN South Africa, MTN Group today reported resilient overall results for the first nine months of 2022, under difficult macroeconomic, geopolitical and regulatory conditions across our markets.

Total MTN Group subscribers increased by 6.8% to 285 million; our fintech business’s customer base rose by 23.3% to 63 million; and fintech transaction volumes increased by a third to 9.5 billion.

MTN South Africa – which is the second-largest contributor to MTN Group service revenue after MTN Nigeria – grew subscriber numbers by more than 800 000, or 8.1%, to 35.9 million in the period to 30 September 2022. Service revenue growth of 3.5% was impacted by loadshedding and revenue concessions that supported the recapitalisation of national roaming customer Cell C.

MTN South Africa’s enterprise business continued to expand, delivering service revenue growth of 19.7%. The consumer postpaid business was resilient, with growth of 4.2%. The rising cost of living and the impact of loadshedding was felt most acutely in the consumer prepaid market, where service revenue grew by 0.4% in the period.

“Amid unprecedented loadshedding which negatively affected network availability, MTN South Africa expanded market share, delivered encouraging underlying service revenue growth, strong expense controls and investment in network resilience and expanding the 5G coverage,” said MTN Group President and CEO Ralph Mupita.

“Supported by an increase in smartphone penetration, MTN SA continued to make data more affordable: the effective data tariff reduced by 23.4% year on year. This helped stimulate usage for both prepaid and postpaid subscribers. Work on network resilience and availability progressed well, but persistent loadshedding in the last quarter of the year could impact revenue growth, particularly in the consumer prepaid market,” he added.

Over the past week, MTN Group’s listed subsidiaries in Nigeria, Ghana, Rwanda and Uganda have released detailed third quarter trading updates. These operations contributed to the overall increase of 14.3%, in constant currency, to R144 billion in MTN Group service revenue; strong growth in data traffic and fintech transaction volumes; and the expansion of the Group EBITDA profit margin to 45.3% in an environment of elevated energy and general inflation.

The Group maintained a strong balance sheet with the early partial settlement of US$300 million of 2024 Eurobonds, resulting in lower hard currency debt and reducing the holding company leverage to 0.8x. The Group’s liquidity position remained strong with cash and committed undrawn facilities totalling R59 billion. Cash upstreaming of R11.5 billion from operations in the first nine months of the year was further improved with R1.5 billion in cash repatriated from Nigeria in October 2022, after the period close.

In line with our Ambition 2025 strategy, the Group announced progress with Middle East exit plans, having entered into agreements with M1 New Ventures to dispose of the shareholding in MTN Afghanistan for a gross consideration of US$35 million, subject to transition agreement and regulatory approvals.

MTN Group also reported progress with its process of strategic minority investment into the Group fintech business, noting that it was now in the binding offer phase and expecting outcomes in early Q1 2023.

We are encouraged by the growth and expansion of the fintech ecosystem as we see robust transaction volumes driven by growth in customers, agents and merchants,” said Mupita. “In the near term, revenue growth has been impacted by new taxes in a few markets, but we continue to see the case for structural and compelling growth for fintech services in the medium term that will deepen financial inclusion across Africa.”

As to the outlook for the rest of the year, Mupita said it remained challenging given the difficult geopolitical conditions and macroeconomic environment globally, but that MTN Group was well positioned to withstand any shocks or take advantage of growth and value-creating opportunities that may arise.