MTN Group Faces Profit Declines Amid Nigerian Naira Devaluation and Sudan Conflict
MTN Group’s profits declined significantly, primarily due to the Nigerian naira devaluation and conflict in Sudan, resulting in a nearly 69% drop in HEPS year-over-year. Despite the unfavorable conditions, the CEO expresses optimism about growth prospects in Nigeria and positive performance in South Africa. The company’s strategies include raising tariffs and optimizing operational costs as it continues to navigate a challenging business environment.
MTN Group has reported a significant decline in profits due to factors such as the ongoing conflict in Sudan and the devaluation of the Nigerian naira. For the year ending December 31, 2024, the group’s headline earnings per share (HEPS) fell nearly 69% year-over-year. However, if calculated in constant currency, the measure would show a growth of 13.8%, highlighting challenges posed by these external pressures.
Despite these setbacks, MTN Group President and CEO Ralph Mupita expressed satisfaction with the company’s overall performance and the strategic execution amidst challenging markets. He noted that the sharp naira devaluation affected profitability but obscured the underlying robust performance of the business. Mupita remains optimistic about Nigeria’s growth potential as signs indicate stabilization of the naira and a decrease in inflation rates.
To enhance profitability in Nigeria, MTN has initiated strategic measures, including renegotiating tower lease contracts that have saved approximately R1.3 billion (US$71.6 million). Furthermore, the company is raising mobile tariffs by 50% following regulatory approval, seeking to stimulate revenue growth by expanding its subscriber base and enhancing service revenues.
The situation in Sudan continues to hinder MTN’s operations, where a prolonged conflict has resulted in hyperinflation and network disruptions. Since the onset of the conflict in April 2023, MTN has faced challenges such as power outages and fuel shortages, but recent improvements have allowed some network sites to resume operations.
In contrast, MTN’s operations in South Africa displayed resilience, with service revenue growth of 3.1% to R43.2 billion ($2.4 billion) despite challenges elsewhere. Notably, South Africa contributed 24.3% of total service revenue, while Nigeria accounted for 22.9%. Positive developments such as the elimination of excise duty on low-cost smartphones are anticipated to deepen digital inclusion and boost connections in the region.
MTN’s group EBITDA decreased by a third to R60.1 billion ($3.3 billion), though a constant currency perspective would reveal an increase of 10.2%. The company continues to invest in enhancing network capacity and quality, planning R30-35 billion ($1.7-1.9 billion) in capital expenditures for 2025.
Throughout the year, MTN’s subscriber base grew by 2.2% to reach 290.9 million across 16 markets. Notably, data traffic and fintech transactions surged, indicating upward trends in service revenue, despite overall data revenue declining by 12.3% on a reported basis. However, in constant currency terms, data revenue showed an encouraging increase.
MTN is also focusing on optimizing its portfolio, having divested from some underperforming markets, including the final sale of MTN Afghanistan and the conclusions of transactions in Guinea-Bissau and Guinea-Conakry. The company intends to maintain local ownership compliance in Ghana and Uganda, having made significant advancements in this area.
Looking forward, CEO Ralph Mupita remains optimistic about MTN’s capacity to leverage emerging opportunities amid prevailing economic uncertainties. He noted a reduction in inflation and forex volatility, particularly regarding the naira, positioning MTN to achieve its growth objectives and create shared value in its operational territories.
In summary, MTN Group’s financial performance has been adversely affected by external factors, with significant impacts from the Nigerian naira devaluation and ongoing conflict in Sudan. Despite these challenges, the leadership remains optimistic about recovery opportunities, especially in Nigeria. The company is strategically focused on enhancing profitability through initiatives like tariff increases and network improvements while maintaining a positive trajectory in its South African and other markets. This strategic approach positions MTN to navigate difficulties and unlock value for stakeholders moving forward.
Original Source: www.connectingafrica.com
