MTN Group Faces Profit Challenges Amidst Currency Devaluation and Regional Conflicts

MTN Group has reported a nearly 69% decline in headline earnings per share due to the naira devaluation and conflict in Sudan. The company remains optimistic about recovery in Nigeria, implementing measures to strengthen profit margins. In contrast, South Africa showed revenue growth. Overall service revenue has decreased, but subscriber numbers and fintech transactions are on the rise. MTN is pursuing a portfolio optimization strategy for better market positioning.

MTN Group has reported significant challenges to its profitability, primarily due to the devaluation of the Nigerian naira and the ongoing conflict in Sudan. For the financial year ending December 31, 2024, the company’s headline earnings per share (HEPS) declined by nearly 69%, although in constant currency terms, there was a 13.8% increase. CEO Ralph Mupita emphasized that despite these macroeconomic hurdles, the company remains optimistic about its overall performance.

Mupita noted that the naira’s drastic devaluation has impacted MTN’s financial output, obscuring the underlying strong business performance. Nonetheless, he expressed positive sentiments about growth prospects in Nigeria, citing early stabilization signs of the naira and a decline in inflation. The company has initiated strategies to bolster profits, which include renegotiating tower lease agreements and adjusting mobile prices following regulatory approval for a tariff increase.

The conflict in Sudan, which has persisted since April 2023, has severely disrupted MTN’s operations due to network shutdowns, power outages, and fuel shortages. Mupita mentioned that MTN has begun restoring some service in Sudan, seeing improvements since December 2024. Meanwhile, MTN’s service revenue fell by 15.4% to $9.8 billion, with Nigeria experiencing a nearly 45% drop; however, South Africa showed resilience with a 3.1% revenue growth.

MTN’s recent performance in South Africa reflects enhanced network availability and effective commercial strategies. The group also anticipates positive effects from the South African government eliminating a 9% excise duty on low-cost smartphones, which would facilitate wider digital access. Regarding EBITDA, it declined significantly; however, adjustments for currency fluctuations would have shown a positive growth trend.

Over the past year, MTN increased its capital expenditure to enhance network quality and capacity, with plans to sustain this investment level in 2025. Notably, its subscriber base rose by 2.2%, with active data users and fintech transactions reflecting growth. The company also engaged in a portfolio optimization strategy, offloading underperforming operations in Afghanistan and other areas while ensuring compliance with local ownership requirements in Ghana and Uganda.

Looking forward, Mupita conveyed a cautious optimism despite existing uncertainties, pointing to recent positive trends such as decreasing inflation and more stable foreign exchange conditions. He stated, “MTN Group is well positioned to capture the exciting opportunities in our markets and deliver on our medium-term objectives to sustain growth,” underscoring a commitment to creating value for its stakeholders.

In summary, MTN Group is currently facing a challenging environment, particularly due to the depreciation of the Nigerian naira and the unrest in Sudan, which have adversely impacted its profitability. Despite these obstacles, the company remains optimistic about growth prospects in Nigeria and has implemented various strategies to stabilize and enhance its performance. The South African market continues to show resilience, contributing positively to overall revenue, while the company actively pursues opportunities for improvement and expansion in its operational regions.

Original Source: www.connectingafrica.com