MTN Group Faces Headwinds with Earnings Decline but Maintains Growth Strategies

MTN Group reported a 68% decline in headline earnings per share due to currency devaluation and conflict in Sudan. Despite a 15.4% fall in service revenue, there were positives, such as subscriber growth and stable financial ratios. The CEO recognized the underlying performance amid challenges, with plans for significant network investments in the coming year.

MTN Group has experienced a significant decline in headline earnings per share, reporting a 68% decrease to 98 cents, largely due to the devaluation of the naira in Nigeria and ongoing conflict in Sudan. The group, listed on the JSE, released its financial results for the year ending December 31, 2024, indicating a 15.4% drop in group service revenue to R177.8 billion, although there was a 13.8% increase when adjusted for constant currency.

Notable elements from the annual results include a 12.3% decline in data revenue on a reported basis, contrasted with a 21.9% rise in constant currency. Fintech revenue showed an increase of 11% on a reported basis, escalating by 28.5% in constant currency terms. Earnings before interest, tax, depreciation, and amortization (Ebitda) fell by 33.5% on a reported basis, yet demonstrated a 10.2% rise to R70.1 billion in constant currency. The Ebitda margin decreased by 8.9 percentage points to 32% on a reported basis, a slight dip of 0.8 percentage points to 38.2% in constant currency.

The total subscriber base saw a growth of 2.2%, reaching 290.9 million, while active data subscribers increased by 7.7% to 157.8 million. Monthly active users of Mobile Money rose by 0.9%, totaling 63.1 million. MTN Group CEO Ralph Mupita expressed satisfaction with the underlying performance and strategic execution despite operational challenges, highlighting improved macroeconomic indicators in several key markets.

Additionally, MTN reported a stable balance sheet, with a net-debt-to-Ebitda ratio of 0.7 times at year-end, an improvement from 0.4 times the previous year. The leverage of the holding company stood at 1.4 times, aligning with target thresholds and reflecting progress in the second half of the year. A final dividend of R3.45 per share has been declared, with expectations to raise it to at least R3.70 for the 2025 financial year.

Looking ahead, MTN maintains its medium-term guidance and plans to invest between R30 billion and R35 billion in its networks for the 2025 financial year, dependent on current currency conditions.

In conclusion, MTN Group is navigating challenging market conditions with a notable reduction in earnings and revenue but showing resilience through strategic execution. The growth in subscribers and a stable balance sheet are positive indicators for the company’s future. Planned investments and expected dividend increases may enhance shareholder confidence as MTN continues to adapt to economic fluctuations.

Original Source: techcentral.co.za