MTN’s network users have to brace for tariff and bundle offering adjustments as the company implements strategies to defend its resilience against an expected escalation in macroeconomic headwinds after being affected by a plunge in data and voice revenue in the quarter to end March.
The rival mobile operator to Vodacom said yesterday that “the remainder of the year is anticipated to continue to present macro headwinds” for its SA operations’ revenue and cost development.
This has been made worse by elevated inflation and interest rates as well as the impacts from the ongoing geopolitical volatility.
MTN has thus lined up initiatives “to navigate the prevailing conditions” which include price and data bundle offering reviews.
“These (strategies) include price-ups in prepaid plans and other portfolios, as well as revision of data bundle portfolios in Q2 to improve effective pricing,” the company said.
MTN South Africa had also invested in the device market to accelerate revenue generation initiatives, although this was expected to weigh on the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) margins.
“MTN SA’s Q1 performance was resilient in a challenging operating environment,” said Ralph Mupita, CEO for MTN.
However, there was an improvement in the frequency and severity of power outages in South Africa during the quarter under review.
MTN noted that there had been a total of 83 days of load shedding experienced during the quarter under review, compared to 90 days in the same period last year.
MTN has had to invest in network resilience through upping investment in generators and standby batteries on the back of crippling power cuts.
Despite the macro-headwinds, MTN grew revenues for the quarter in South Africa by 3%, with the total subscriber numbers in the SA market also going up by 3.3% to 37.1 million.
This helped MTN narrow down the decline in total outgoing voice revenue from a 16% dip in the first quarter of 2023 to a decline of 5% in the quarter under review.
Although data continued to be a key growth driver for MTN SA, boosted by a 6.1% growth in data user numbers to 20.4 million, there was muted growth in data revenue of 2.5%.
While Vodacom said on Monday that average data usage per smart device increased by 26.0% to 3.8GB per month in 2023, MTN said yesterday that active prepaid data subscribers consume an average of 3.3GB per month, a 22.4 increase on prior year.
Active postpaid subscribers on MTN SA consumed 21.9GB per month on average, representing a 55% leap from the same period last year.
The stronger revenue generation in its SA market was held back by headwinds in MTN’s other regional markets that include Sudan, Nigeria and Ghana among others.
Overall, MTN’s revenue dipped 18.8% during the quarter to end March, with voice and data revenue falling 32.2% and 14.7% respectively.
“The macro environment in first quarter of 2024 remained challenging with ongoing high inflation as well as local currency devaluations in some of our key markets,” Mupita explained.
“In Nigeria, we saw strong underlying commercial momentum in the business, despite the financial impacts of the sharp devaluation of the naira and continued elevated inflation during the period.”
Despite overall group EBITDA for the period increasing by 3.9%, EBITDA margins in MTN declined 2.5 percentage points to 38.1%.
This has been attributed to impacts from “upward pressure on costs due to inflation and forex depreciation mainly in Nigeria, network resilience costs and electricity tariff escalations in MTN SA and the impact on operations from the conflict” in Sudan.
Nonetheless, MTN invested R5.4 billion in capital expenditure in the year-to-date period, sinking money into its networks and platforms to attain a capex intensity of 11.8% for the period.
BUSINESS REPORT