MTN’s management have been encouraged by trends that point to optimism about the pan-African telecoms group’s growth this year, in spite of some remaining near-term macroeconomic and geopolitical uncertainties, CEO Ralph Mupita said on Monday.
The group, which serves 291 million subscribers in 16 markets and which Monday reported strong underlying operational performance in 2024 with a healthy balance sheet, has forecast a 370 cents dividend for 2025, up from the final dividend of 345 cents per share.
Encouraging indicators included inflation that showed signs of abating in the second half of 2024, reduced forex volatility, particularly of the naira in Nigeria, as well as the tariff adjustments in that country that the group started to implement in February 2024. These prompted MTN Nigeria to reinstate its medium-term guidance.
Anchor Capital said in a note that it was “nice to see some acceleration in service revenue growth” in the second half and “holdco leverage looks well under control. Decent upstreaming of cash to the centre. Dividend guidance…still pretty stingy…”
In 2024, relative stability in inflation and foreign exchanges in certain key markets supported the results, with “pleasingly positive momentum in second half earnings, free cash flow and leverage ratio.” Free cash flow had improved to R21.5bn in the second half from R9.9bn in the first half.
Mupita said in a presentation that one geopolitical uncertainty that might affect MTN was the impact of reduced foreign aid by “the global north” to some countries where MTN operates, that depended on this aid.
MTN’s adjusted headline earnings per share fell 32% to 816 cents per share in 2024 despite a 13.8% increase in revenue, with underlying earnings growth impacted by impairments and losses at MTN Sudan and foreign exchange-related losses.
“This meant that even though the group’s service revenue and earnings before interest, tax and amortisation (EBITDA) in constant-currency terms grew by around 14% and 10% respectively, they were negatively affected in reported rand terms,” said Mupita.
He said MTN Nigeria, which has over two years struggled to report earnings growth due to high inflation and foreign exchange volatility, may be in a position to report monthly profit growth and this would be used to build up its equity and reserves before it could resume dividend payments.
As an indication of the stronger second half, group service revenue increased by 15.5% in the period while the EBITDA margin increased to 39.9% from 36.5% in the year to December 31, 2024. Service revenue of R178bn was down by some 15% in reported terms for the year.
“With a relatively more stable naira in the second half of 2024 and stronger results from MTN South Africa, second half adjusted HEPS showed strong momentum,” said Mupita.
MTN Group initiatives in the year included agreements with Mastercard for a minority investment into the Group Fintech structure, as well as the disposal of MTN Afghanistan, MTN Guinea-Bissau and MTN Guinea-Conakry, which were aimed to enhance the group’s focus and risk profile.
“Alongside execution of our commercial strategies, our capital investment of R30bn to strengthen the quality and capacity of our networks enabled us to capture the opportunities in data and fintech across our markets,” he said, adding that data traffic accelerated by a third, as data subscribers grew by 8% to 158 million active users.
The volume of fintech transactions on MTN’s networks rose 15% to more than 20 billion valued at over $320bn, while the number of active Mobile Money (MoMo) users rose by just less than 1% to 63 million, slowed by initiatives in key fintech markets to enhance the quality, stickiness and profitability of the fintech ecosystem.
Data revenue fell by 12%, but increased by almost 22% in constant-currency terms. Fintech revenue increased by 11% on a reported basis, but by almost 29% in constant currency. As part of the expense efficiency programme (EEP), sustainable savings of R3.8bn were realised.
MTN South Africa saw a resilient performance, with service revenue growth of 3.1% to R43.2bn, underpinned by improved network availability and commercial initiatives. Prepaid data revenue returned to growth from November, and a focus would be to grow this further, said Mupita.
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