Mobile operator MTN was confident in its annual report, released on Wednesday, that it expected to ring in growth this year despite the global geopolitical and economic picture remaining volatile and challenging.
The momentum of the economic recovery decelerated in 2022 with global gross domestic product growth slowing to 3.4% from 6.0% in 2021. Global inflation averaged 8.8% in 2022 from 4.7% in 2021 – the highest in about 25 years. These effects were exacerbated by the conflict in Ukraine, China’s zero Covid-19 policy as well as exchange rate volatility, which put additional strain on supply chains.
The slowdown in sub-Saharan Africa was more moderate with growth of 3.6% down from 4.1% the prior year.
Mcebisi Jonas, the chairman of MTN, said on Wednesday, “MTN will continue to implement proactive measures to manage inflationary pressures and macroeconomic volatility.
“Despite these challenges that impact our business in the short term, we still see attractive opportunities ahead and believe that MTN’s resilient business model, strong balance sheet and robust and relevant strategy position the group for accelerated growth and relevance in the run-up to 2025 and beyond.”
This after MTN delivered another solid performance in 2022. Its service revenue rose 14.4% to R196.5 billion, while headline earnings per share rose 16.9% to R11.54 in that period.
In MTN Group’s home market of South Africa, macroeconomic pressures were compounded by the deterioration of grid power availability: load shedding increased throughout 2022, particularly in the second half.
He said MTN South Africa was addressing this through a comprehensive network resilience plan, which MTN expected would improve network availability into the second half of 2023 and support a recovery in service revenue back towards its medium-term target range of 4% to 6% growth per annum.
Talking about the impact of rising energy costs, group president and CEO Ralph Mupita said the impact was well managed in 2022, with energy costs contributing about 6-8% to total costs at group level, 9-10% in South Africa, 5-7% in Nigeria and 10-12% in Ghana.
He said in South Africa MTN estimated that the overall effect of load shedding on the top line and on costs resulted in a negative impact of R695 million, or 3.4%, on MTN SA’s Ebitda.
MTN SA commenced the rollout of its comprehensive network resilience plan in the second half of 2022, which resulted in the upgrade of 3253 sites by the end of February 2023.
“We revised MTN SA’s medium-term Ebitda margin to 37-39% (from 39-42%) while keeping our medium-target for MTN SA’s service revenue growth unchanged (mid-single digits). We anticipate that load shedding will continue at peak stages in the near term; at stage 4 and above, the associated costs start impacting the margin directly,” Mupita said.
He said once improved network availability was achieved, MTN SA would be in a position to start driving the recovery in top-line growth in the second half, towards the medium-term target for the business.
“MTN’s medium-term growth outlook is underpinned by the structurally higher demand for our data and fintech services, which aligns strongly with our belief that everyone deserves the benefits of a modern connected life,” he said.
MTN said it continued to drive digital and financial inclusion, connecting 137 million and 69 million active data and fintech users respectively. In 2022, it grew service revenue by 15.3% and held the Ebitda margin steady at 44.0%.
As regards remuneration, Mupita was paid R9.1 million in 2022, a 4.4% hike from 2021. Tsholofelo Molefe, the chief financial officer was paid R9.6m, up 2.66% from 2021. Charles Molapisi, the CEO of MTN South Africa, was paid R8.96m, up from R7.43m the prior year.
BUSINESS REPORT