MTN Group, the prominent South African telecommunications conglomerate, has reported a notable decline in both earnings and service revenue for the first half of the fiscal year, despite an uptick in subscriber numbers. This downturn is attributed to an increasingly challenging business environment.
The group’s service revenue fell sharply to 85.32 billion South African rand (approximately $4.78 billion), a significant decrease from the 107.735 billion rand recorded in the corresponding period of the previous year. This decline reflects the pressures faced by the company across its diverse markets in Africa and the Middle East.
Earnings before interest, taxes, depreciation, and amortisation (Ebitda), excluding once-off items—a key performance metric favoured by the company—also suffered, plunging to 29.05 billion rand from 49.41 billion rand. The Ebitda margin, which is an indicator of operational profitability, contracted to 32% from the previous year’s 43.6%, highlighting the increased cost pressures and adverse conditions within the sectors in which MTN operates.
Despite these financial challenges, MTN’s subscriber base experienced modest growth. The company recorded a 0.8% increase in total subscribers, bringing the number to 288 million at the end of the reporting period. However, this positive development in subscriber numbers was insufficient to counterbalance the broader financial pressures impacting the group.
In a move that may disappoint investors, MTN’s board opted not to declare an interim dividend for the period under review. Nevertheless, the company reaffirmed its medium-term financial outlook, maintaining its guidance for capital expenditure, which is anticipated to range between 28 billion and 33 billion rand in 2024. The board has also committed to paying a minimum final dividend of 330 cents per share for the full year, indicating its confidence in the group’s longer-term prospects despite current headwinds.
In a separate announcement, MTN Group proposed extending the terms of the MTN Zakhele Futhi broad-based black economic empowerment transaction by three years, extending the overall duration of the programme to 11 years, now set to conclude in November 2027. The company has confirmed that it will absorb the costs associated with this extension, underlining its ongoing commitment to enhancing economic empowerment initiatives within its home market.
MTN Group’s latest financial results underscore the complex and often volatile conditions that telecommunications companies face in emerging markets. While the company continues to grow its subscriber base, the broader economic and operational challenges it encounters highlight the difficulties in translating this growth into sustained revenue and profitability.
