MTN Group has reported a significant downturn in profits due to the devaluation of the Nigerian naira and conflicts in Sudan, with a nearly 69% drop in HEPS year-over-year. CEO Ralph Mupita remains optimistic about recovery prospects in Nigeria, supported by cost-saving strategies and a positive outlook for South Africa. Despite a decline in service revenue, the company is poised for growth through subscriber expansion and portfolio optimization.
MTN Group has faced significant financial challenges due to the devaluation of the Nigerian naira and the ongoing conflict in Sudan. For the fiscal year ending December 31, 2024, the company’s headline earnings per share (HEPS) fell by nearly 69% year over year, although the company reported a potential increase of 13.8% when adjusted for constant currency. CEO Ralph Mupita emphasized that despite these macroeconomic challenges, the company’s commitment to strong performance and strategic initiatives remains intact.
Mr. Mupita addressed the adverse effects of the naira’s devaluation, stating it influenced the financial results significantly, which seemed to obscure positive underlying business performance. He expressed optimism about growth prospects in Nigeria, indicating early signs of naira stabilization and a decrease in inflation. Encouraged, he mentioned ongoing recovery plans, including renegotiated tower lease contracts that have realized significant operational savings.
The protracted conflict in Sudan has severely hampered MTN’s network operations, increasing the financial strain. With ongoing disruptions including power outages and fuel shortages, the situation remains challenging. However, Mr. Mupita noted slight improvements in network availability since late 2024, with some sites in Sudan, including those in Khartoum, being reactivated.
While the overall group service revenue dropped by 15.4% to 177.8 billion rand ($9.8 billion), South Africa’s market outperformed with a growth of 3.1%. MTN’s strategy for this market included the anticipated removal of the 9% excise duty on affordable smartphones, which is expected to enhance digital access for low-income households and promote growth in mobile data usage.
MTN’s group earnings before interest, tax, depreciation and amortization (EBITDA) experienced a significant decline of one-third year over year. Nevertheless, if currency values had remained stable, EBITDA would have seen an increase of 10.2%. In line with growth strategies, the company has allocated substantial capital expenditures to enhance network capacity.
Subscriber growth remained positive, with an increase of 2.2% year over year, totaling 290.9 million across 16 markets. However, disruptions in Sudan negatively impacted subscriber figures. The reported data subscription revenues decreased but showed growth in constant currency terms. Moreover, fintech transactions surged significantly, displaying strong trends in overall service revenue and operational cash flow toward the latter half of the year.
MTN is currently engaged in a comprehensive portfolio optimization strategy, moving away from underperforming markets. The completion of the MTN Afghanistan sale reflects this initiative. With a focus on compliance with local ownership requirements and planned exits from less profitable regional operations, MTN aims to reinforce its market position in Africa. Mr. Mupita reiterated the company’s readiness to navigate future macroeconomic uncertainties, expressing confidence in achieving sustainable growth and creating value for stakeholders.
In summary, MTN Group continues to grapple with severe financial setbacks largely attributed to the devaluation of the Nigerian naira and conflict conditions in Sudan. Consequently, despite a drop in headline earnings and EBITDA, there remains an optimistic outlook on recovery across its African markets, particularly Nigeria, as strategic initiatives begin to take effect. The company is strategically optimizing its portfolio to focus on stronger markets, confidently navigating through geopolitical challenges while striving to create value for all stakeholders.
Original Source: www.connectingafrica.com
