MTN will spend just over R6bn in South Africa as it fights to regain lost market share in the prepaid segment, especially in two provinces where rivals gained customers seeking better value for their money.
That is down from the R9.8bn spent in the last financial year to December, with some of that money going to backup power at its towers to ensure uninterrupted coverage during power cuts.
MTN Group CEO Ralph Mupita said the postpaid, enterprise, wholesale, digital and fintech segments all recorded good growth, resulting in total service revenue growth of 3.1% to R43.1bn.
“The pressure point is in prepaid,” he said. The company increased prices last year in line with some of its competitors.
“For us, we always understood that there were going to be a couple of quarters before we saw prepaid price increases starting to work their way through to drive service revenue growth. So we're going through that adjustment period, and we have insights into the two or so regions we've got pressure, but actually [in] the other regions, we are trading fine.”
Mupita did not want to reveal the two regions where MTN is having a hard time.
He said the reduction in capex would not impact the company’s growth plans.
In total the company invested R4.5bn into network resilience across 13,000 sites. “We’ve got enough capacity and we need to get a return from our investment.”
The consumer prepaid business, which had 29.9-million subscribers, up 5.5% at the end of December, recorded marginal growth in service revenue at 0.8%, with a slight slowdown in the last quarter of the year, largely due to increased competition.
Charles Molapisi, MTN SA CEO, said the company was “comfortable that with a R6.5bn spend we should remain competitive. The prepaid recovery is largely isolated into two major provinces or regions, and I think in many other regions we are growing in quite decent numbers. That gives us the confidence that we are able to recover the key regions that we have lost. Probably in [the second half of the year] we should be able to see some recovery on the prepaid side.”
Peter Takaendesa, head of equities at Mergence Investment Managers, said Telkom mobile and MTN had been gaining total service revenue market share in South Africa for most of 2024, but Vodacom fought back towards the end of the year, particularly in prepaid services. He said Telkom mobile remains in a strong position with its better-priced data packages.
The price increases in Nigeria will help MTN recover its profitability and the revised tower lease terms should limit the impact of further naira devaluations in the future
— Peter Takaendesa, head of equities at Mergence Investment Managers
“MTN SA is likely to find it difficult to bounce back in prepaid if Vodacom continues to do what they did in the 4th quarter of the year. However, we need more data points to conclude on that dynamic and there are no structural issues against MTN's ability to bounce back.”
MTN SA added 2.4-million subscribers, taking its total to 39.8-million at the end of December. Of those 4.3-million are contract or postpaid customers, up 6.1%. The business recorded a 4.5% increase in service revenue, driven by a rise in subscriber numbers, continued strong data usage and price adjustments in February last year.
Overall, MTN is spending up to R35bn this year, with most of the money going to its Nigerian business “because we see significant growth opportunity there. We're seeing our network filled with demands,” said Mupita.
The Nigerian business is expected to show strong recovery as new tariffs the company introduced this year filter through.
“The price increases in Nigeria will help MTN recover its profitability and the revised tower lease terms should limit the impact of further naira devaluations in the future.” Takaendesa said. Revenue growth will remain strong in Nigeria, driven by both the price increase and continuing data traffic growth, while fintech will add meaningfully to this over time.
“If there is no further material devaluation of the naira and no major negative regulatory issues in Nigeria over the mid term, MTN will have a strong operational recovery and resume dividends upstreaming from Nigeria.”
MTN reported a loss after tax of R11bn, hit by a sharp drop in the value of the currency in Nigeria and impairments in conflict-hit Sudan. Total service revenue was down 15% to R178bn. MTN’s total subscribers grew 2.2% to 290-million across its 16 operations, including in Rwanda, Ghana, Swaziland, Uganda and Cameroon.
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