MTN expects an uplift in revenue if it and other telecom operators in Rwanda are allowed to start making money from interconnect fees again.
The regulator in that country cut mobile termination rates (MTR) to zero in August 2023, hurting earnings of Africa’s largest mobile operator. This directive was for a year. The regulator is now in talks with mobile operators to find an appropriate rate at which such charges can be levied.
MTN is hopeful that the talks will yield positive results.
“On the regulatory front, we maintain close engagement with the Rwanda Utilities Regulatory Authority on the issues affecting our operations. This includes the zero-rating of local mobile termination rates and the interconnect costs associated with permanent roamers in the one network area region,” MTN Rwanda CEO Mapula Bodibe said.
“We are participating in, and following up on, the ongoing MTR study being conducted to determine the applicable MTR, which will be determined before the end of the year.”
The group has maintained its 2024 financial year guidance, with low double-digit growth in percentage terms expected in service revenue, assuming a new directive on MTR. Without these fees, it expects single-digit growth in service revenue.
This comes as MTN Rwanda reported a loss in the third quarter as it reported lower earnings before interest, tax, depreciation and amortisation (ebitda), an increase in depreciation on its tower leases and regulatory issues.
The loss after tax for the September quarter of 400-million Rwandan franc (about R5.08m) took the loss for the nine months ended September to 10.87-billion Rwandan franc, from a profit of 8.2-billion Rwandan franc a year ago.
“Given the strong headwinds facing our business, we are encouraged to have delivered a relatively resilient top-line performance supported by the sustained growth in our subscriber base,” Bodibe said.
Mobile subscribers increased 5.3% year on year, reaching 7.6-million. Active MoMo subscribers delivered strong growth of 13.4% to end the period at 5.2-million. Active data subscribers fell 10.3% to 2.3-million, affected by data usage substitution due to subsidised smartphones in the market incapable of generating data traffic on the MTN network.
The group’s service revenue grew 1.6% to 189.3-billion Rwandan franc, affected by the year-on-year decline in voice and data revenues.
“Notably, our Mobile Money revenue delivered strong growth of 29.4% year on year, underpinned by a growth in advanced services. This highlighted the pleasing expansion of mobile payments aligned with our mission to drive financial inclusion in Rwanda,” it said.
Ebitda fell 22.6% to 65.7-billion Rwandan franc and the ebitda margin contracted 10.9 percentage points to 34%.
The contraction was primarily due to pressure on the top line as a result of the MTR policy, increased interconnect costs associated with permanent roamers in the ONA (One Network Area) region, and the impact of the depreciation of the local currency against the dollar affecting foreign-denominated costs, it said.
The continued growth of our mobile money business is anticipated to propel further top-line growth
— MTN Rwanda CEO Mapula Bodibe
Bodibe said the group was confident that the investments it had made in the modernisation of the network, including the continued expansion of its 4G network, would optimise quality of service and deliver long-term benefits, while delivering cost efficiencies.
“The continued growth of our mobile money business is anticipated to propel further top-line growth coupled with exciting new products that will be introduced for our customers as we continue to deepen financial inclusion in Rwanda,” the CEO said.
Update: November 6 2024
This story has been updated with new information.
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