MTN releases good results but CEO expresses concern about South Africa

MTN performs well but CEO expresses concern about South Africa

A good financial showing in 2022 from pan-African service provider MTN Group was accompanied by stern comments from the group’s CEO Ralph Mupita about the situation it faces in South Africa.

The 2022 financial performance included an expansion in return on equity to 23.4% and a 10% increase in the dividend to 330 cents (US$0.18) per share, in what the company called a challenging macroeconomic environment of elevated inflation across the company’s 19 markets.

In the year to 31 December 2022, the total number of subscribers rose 6% to 289 million, with data subscribers growing by more than 12% to 137 million and users of the Mobile Money-branded service up by 21% to 69 million.

In constant currency terms the Group reported a 15.3% increase in service revenue to R194 billion (about US$10.7 billion) and maintained a stable margin on earnings before interest, tax, depreciation and amortisation (EBITDA) of 44%. EBITDA increased by 14.3% to R90 billion US$4.9 billion). It was supported by an expense efficiency programme which yielded R2.7 billion (US$148.2 million) in savings, mostly in Nigeria and South Africa.

A structurally higher demand for data and fintech services was sustained, supported by an investment of more than R38 billion (US$2.1 billion) in network, IT and platform infrastructure, expanding access to broadband services to almost 88% of the population (up from 83% in 2021).

Alongside the increase in capital investment, the company says its proactive commercial, expense efficiency, supply chain, network and financial resilience interventions helped alleviate the impact on results of a tough operating environment. This included – across markets – high inflation and interest rates, weak local currencies, pressure on disposable income and in South Africa, the significant impact of severe loadshedding.

Expanding on this, Mupita warned: “Government and business must jointly seize this moment and act decisively to deal with the quadruple crises of energy; logistics; crime and corruption; and youth unemployment. Inaction risks South Africa being a failed nation state.”

Bloomberg says that South Africa’s state electricity company has imposed almost 12 hours of power cuts every day this year, prompting companies to spend money on power generators. In fact last month President Cyril Ramaphosa  declared a state of disaster to deal with the energy crisis.

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