In a move aimed at generating cash flows and sustaining business operations, MTN Group said Thursday it is planning to hike prices in selected markets due to inflationary pressures.
The telecom business, which has operations in 19 nations, said in its first quarter report filed with the Johannesburg Stock Exchange that overall inflation across its footprint was 18.5% in the first quarter of 2023, up from 11.5 percent in the same period the previous year.
MTN said to combat inflation, central banks raised interest rates throughout that time. The high interest rates and inflation had a negative impact on consumer purchasing power and corporate activity.
In the statement, MTN Chief Executive Officer Ralph Mupita said, “MTN’s resilient business model and operational execution enabled us to continue to successfully navigate difficult macroeconomic, geopolitical, and regulatory conditions in Q1 2023.
“Local currencies generally weakened against the dollar, and foreign exchange availability was limited in several of our key markets, affecting the pace of capital expenditure and our ability to upstream dividends and management fees.
In its outlook for the rest of 2023, MTN Group said, “We anticipate that trading conditions across markets will remain challenging for the remainder of 2023, and we will continue to execute on our proactive measures to manage the near-term challenges and risks.
“Within this environment of elevated inflation, implementing selective price increases across the portfolio remains a critical priority to ensure that operations generate sufficient cash flows to fund future capital expenditures needed for building world-class networks.
“We will continue to have the necessary engagements with the regulatory authorities on such needed increases.”
South African Market
MTN SA advanced the comprehensive network resilience plan with improved network availability as we exited the quarter. The teams upgraded additional sites with batteries and started piloting solar solutions on a limited number of sites, as well as deploying additional security solutions where there is a high risk of theft or vandalism.
“Over and above reduced economic activity in South Africa, MTN South Africa’s (MTN SA) network availability remained under pressure due to ongoing power outages across the country: there were approximately 90 days of load shedding in Q1 2023 compared to 14 days in Q1 2022.”
According to the report, MTN revenue rose 15.6 percent to 53.83 billion rand ($2.8 billion) in the first quarter of 2023 compared to 45.69 billion rand in the first quarter of 2022, the company said.
The company announced, in correlation with the audited report published on March 17, 2023, total revenue of over N2 trillion, amounting to 22.3% growth in profit before tax.
MTN Nigeria drove strong commercial momentum in a challenging operating environment to deliver a strong financial performance in the period.
Mobile subscribers increased by 10.5% to 75.6 million, and active data subscribers increased by 15.3% to 39.5 million. Profit before tax grew by 22.3% to N534.0 billion. The total dividend for the year is N15.60 per share, with a final dividend of N10 per share.
4G network coverage reached 79.3% of the population in the first quarter, an increase from 79.1% in December 2022, while data use grew by 31.3% to 7.8 GB per user.
However, the report noted: “In addition to higher inflation and interest rates as well as challenges with the availability of hard currency liquidity, the Nigerian economy was also impacted by the Central Bank of Nigeria’s redesign and introduction of new naira notes on December 15, 2022.
The limited availability of new notes resulted in cash shortages, which impacted customers’ ability to recharge through physical channels and transact within the MoMo agent network.”
MTN’s Ambition 2025 Strategy
MTN Ambition 2025 is anchored in building the largest and most valuable platform business, with a clear focus on Africa. This will rest on a scaled connectivity and infrastructure business, making use of both mobile and fixed access networks across the consumer, enterprise, and wholesale segments.
It regularly evaluates investments to increase profits and lower risk. As a result, the MTN Group is considering a medium-term orderly exit from three operations in West Africa: MTN Guinea-Bissau, MTN Guinea-Conakry, and MTN Liberia. Axian Telecom has made the group an offer for our equity stakes in these Opcos, which is currently being considered.