MTN’s business in Rwanda has signalled a slowdown in revenue growth for 2024, owing to several regulatory hurdles such as mobile termination rates that it has to overcome.
This, as the company reported a sharp drop in interim earnings for the half-year to end-June.
The mobile operator’s previous guidance was for percentage growth in service revenue in the mid-teens, 45% earnings before interest, tax, depreciation and amortisation (ebitda) margin and a capex intensity range of 15%-17%.
This week MTN Rwanda CEO Mapula Bodibe told investors that this been revised to “single-digit service revenue growth”, a 40%-42% range in ebitda margin and capex intensity “in the mid-twenties”.
“We are closely engaging the relevant stakeholders regarding key issues impacting the business. This includes the MTR [mobile termination rates] decision and the ONA (one network area) challenges affecting our top-line revenue growth. We believe a clear direction on the above will be reached in the second half of the year.”
The regulator in that country moved to cut mobile termination rates to zero in August 2023.
MTN Rwanda reported that its earnings were negatively affected by the directive, which came in the fourth quarter.
That trend has continued this year, with the mobile company reporting that voice revenue fell 24.3% year on year for the six month to end-June, “due to the effects of the zero mobile termination rate regulatory directive on interconnect revenues”.
MTN Rwanda, also known as MTN Rwandacell, is the largest mobile operator in the East African country, which has a population of about 13-million. It listed on the Rwanda Stock Exchange in May 2021.
The company reported that service revenue rose 0.8% to 121.5-billion Rwandan francs (R1.66bn) for the period. After-tax profit fell by 307.1% to a loss of 10.5-billion Rwandan francs due to lower ebitda and an increase in depreciation on the company’s tower leases, driven by the rollout of additional sites.
Ebitda decreased by 29% to 39-billion Rwandan francs.
Total subscriber numbers rose 7.5% year on year to 7.5-million while active data subscribers increased 0.6% to 2.3-million.
Mobile money customers were up 15% to 5.1-million, with the company noting that the trajectory of advanced mobile money services — payments, remittance, savings and lending — was especially strong, up 69.2%.
Fintech contribution to overall service revenue increased to 39.1% from 33.4%.
Capital expenditure rose 28.6% to 32.8-billion Rwandan francs. Excluding leases, capex was up 49.4% to 29.6-billion Rwandan francs.
Excluding the impact of zero MTR, normalised voice revenue would have been 3.2% lower, while overall service revenue would have increased by 8.6%.
“The macroeconomic environment in Rwanda is expected to remain relatively stable in the second half of 2024,” the company said.
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