In the face of a challenging macroeconomic landscape marked by inflation spikes, fluctuating currencies, and regulatory shifts across its 19 markets, MTN Group showcased unwavering resilience in the first half of 2023. This exceptional performance was further augmented by the telecom giant’s strategic collaboration with Mastercard in the realm of fintech and significant progress toward its Ambition 2025 strategy.
MTN Group’s President and CEO, Ralph Mupita, expressed the sentiment, stating,
“We delivered a resilient performance in H1 2023 and made good strategic progress against a tough macro backdrop.”
This sentiment was underpinned by notable achievements within the South African and Nigerian markets, marked by improvements in network availability and strategic policy changes, respectively.
In the South African sector, investments in power resilience paid off, manifesting in heightened network availability and translating to a more robust Q2 2023 performance compared to Q1 2023. Despite severe electricity shortages plaguing the country, MTN South Africa managed to maintain a network availability rate surpassing 90% by the end of June.
Similarly, in Nigeria, the telecom powerhouse demonstrated robust operational outcomes, skillfully navigating cash shortages and surging inflation in Q1 2023. The country’s Q2 2023 policy reforms, although initially exerting short-term negative impacts, were viewed as catalysts for constructive transformations in the investment climate over the medium to long term.
A remarkable growth trajectory was underscored by MTN Group’s service revenue surge of 15%, amounting to nearly R108 billion in constant-currency terms. The driving forces behind this expansion were the stellar upticks in data service revenue (24%) and fintech service revenue (22%). Not to be overshadowed, voice service revenue also reported a healthy 6% increase during the period.
Highlighting its commitment to driving the digital economy, MTN bolstered active data user numbers by over 7%, reaching nearly 140 million. This endeavor was further validated by a 19% increase in overall data traffic and a substantial 22% reduction in the average effective rate per megabyte, making data services more accessible and affordable to a wider user base.
Investments to enhance Africa’s digital infrastructure remained a cornerstone of MTN Group’s strategy, as it invested R17.2 billion in capital expenditure during the first half of 2023. This commitment, coupled with a strong balance sheet, underscored by robust metrics well within loan covenant limits, further solidified the Group’s position in the industry.
Bolstered by burgeoning revenue and operational efficiencies, MTN Group witnessed an impressive 25% surge in adjusted headline earnings per share (HEPS), reaching 749 cents. This was complemented by an expansion in adjusted return on equity (ROE) by one percentage point to 24.4%, aligning seamlessly with the company’s medium-term goals.
In a strategic move to expedite its fintech business expansion, MTN Group orchestrated a symbiotic partnership with Mastercard. This collaboration is set to fortify the growth of MTN’s fintech services, specifically focusing on payments and remittances. The partnership includes a memorandum of understanding that outlines Mastercard’s intent to make a minority investment into MTN Group Fintech, valuing the enterprise at approximately US$5.2 billion on a cash and debt-free basis. This transaction is anticipated to finalize soon, pending customary due diligence and closing conditions.
As part of its portfolio simplification strategy, MTN Group commenced its exit from the Afghan market through the sale of its shareholding to Investcom AF, an affiliate of M1. The transaction, well on track, received conditional regulatory approval, hinging on the submission of requisite documentation to the Afghanistan Regulatory Authority.
Looking ahead, MTN Group remains resolute in its commitment to fostering shared value across its markets. The Ambition 2025 strategy, adaptable to the ever-evolving macroeconomic dynamics, stands poised to deliver growth opportunities despite the prevailing challenges. Mupita concluded,
“We are focused on the continued execution of our Ambition 2025, which remains relevant in the current macroeconomic volatility and presents attractive scope for growth. As we manage the challenges in our operating environment, as well as the near-term impacts on our top-line and margins, we maintain our medium-term guidance.”
