JSE-listed MTN on Monday reported double-digit declines in earnings before interest, taxes, depreciation and amortisation (Ebitda) and service revenue for the first half of 2024.

However, the group said that its underlying performance remains strong, with growth seen when reporting on a constant currency basis.

During the six months to June 30, 2024, MTN posted a reported 41.2% decrease in Ebitda before one-off items to R29-billion, with a 11.6 percentage points decline in the Ebitda margin to 32%.

In constant currency, this decline was just 0.4%, with a 4.4 percentage points decline in the Ebitda margin for the period under review.

“Although the commercial momentum and strategy execution were solid in the first half of the year, macro headwinds impacted reported results,” explained MTN Group president and CEO Ralph Mupita.

He pointed out that the strong underlying performance was masked by the impact of weaker currencies – most particularly the naira against the rand – as well as the ongoing conflict in Sudan on the group’s reported results.

“The sharp devaluation of the naira over the period had the most significant impact on reported results,” he said.

MTN Nigeria’s reported Ebitda plunged 68.3% - 10.8% on a constant currency basis – to R7.37-billion and MTN South Africa’s Ebidta increased 4.3% to R9.56-billion.

During the half-year under review, the group’s overall basic earnings per share decreased by 278.6% to -409c, while reported headline earnings per share (HEPS) decreased by 198.5% to -256c.

“Impacted by the naira devaluation, the translation into the reporting currency and the conflict in Sudan, adjusted HEPS decreased by 50% to 373c and adjusted return on equity declined by 4.2 percentage points to 20.2%,” Mupita continued.

“The group’s balance sheet remained strong, with the holding company leverage ratio at 1.6x, and an improved mix of US dollar debt to rand debt at 22:78, well within our target mix of 40:60.”

MTN Group service revenue decreased by 20.8% to R85.3-billion, with Nigeria’s service revenue down 52.9 to R20.52-billion – a 32.4% increase on a constant currency basis – and South Africa’s service revenue up 3.3% to R31.1-billion.

On a constant currency basis, the group delivered solid service revenue growth of 12.1%, with a 21% expansion in data and 27% hike in fintech revenues.

At the end of June 2024, MTN had 288-million subscribers across 18 markets, of which 150-million were active data subscribers – up more than 9% – who lifted data traffic on MTN’s network by more than a third to 9 054 petabytes.

At 66-million, the number of active Mobile Money users was also more than 9% higher, boosting MTN’s fintech transaction volumes by 18% to 9.7-billion in the period.

The subscriber base was impacted by headwinds from subscriber registration regulations in markets such as Ghana and Nigeria, the decline in subscribers in Sudan amid the ongoing conflict and the group’s exit from Afghanistan.

“In terms of momentum, the underlying growth in our customer base excluding Sudan and Afghanistan was 3.2% year-on-year, representing 3.1-million net additions in the period.”

To support continued acceleration in demand, MTN committed over R13-billion in capital expenditure (capex) to expand its 4G and 5G networks and business information technology systems.

“MTN South Africa, which has now completed its network resilience investment, demonstrated encouraging progress from the first quarter to the second quarter of 2024 in terms of topline growth and earnings,” Mupita said, adding that the investment positioned it to provide an average network availability of more than 95% under stage 6 loadshedding.

At the end of June 2024, network availability was 99%, supported by reduced loadshedding in the second quarter.

The completion of its network resilience plan during the first half of 2024 provided a strong foundation for MTN South Africa to support growth against the macroeconomic headwinds, which continue to place pressure on consumer spend.

“MTN Nigeria delivered a strong underlying performance, despite the severe macro impacts on its financial performance,” he said, noting good progress in key initiatives including acceleration of revenue, optimisation of capex and the reduction of its US dollar-denominated obligations.

Further, MTN Nigeria recently concluded the renegotiation of its tower contracts with IHS and ATC, with the revised contracts set to support earnings and cashflow development in the business as part of the initiatives to resolve the negative equity position of MTN Nigeria.

MTN Nigeria will press ahead with initiatives to restore its profitability and balance sheet profile, particularly in resolving its negative equity position.

Discussions around tariff increases for voice and data continue with the authorities in Nigeria.

Tariff increases remain critical to the recovery and sustainability of the industry in Nigeria and sector engagements with the relevant authorities are ongoing.

“In our markets portfolio, the priority is to sustain the strong growth in markets like Ghana, Uganda and Cameroon, while implementing the necessary initiatives to turn around the performances in Côte d'Ivoire, Rwanda and Zambia.”

While the near-term macro backdrop continues to be challenging across MTN’s markets, gross domestic product, inflation and currencies are expected to improve into 2025 across key markets.

“We are working to accelerate expense efficiencies to help manage the prevailing macro headwinds, in terms of which we continue to target R7-billion to R8-billion in cost savings over the next three years.”

MTN Group maintained its overall medium-term guidance framework, with capex for the 2024 financial year of between R28-billion and R33-billion expected.

Meanwhile, MTN is proposing extending its MTN Zakhele Futhi broad-based black economic empowerment (BBBEE) scheme, which is scheduled to mature on 22 November 2024, for another three years to November 2027, subject to shareholder approvals.

“The proposed extension is in line with MTN's commitment to transformation and creation of shared value for South Africans. BBBEE is integral to the ethos of MTN and MTN believes that BBBEE participation is important to the future success of the group,” Mupita pointed out.

In line with MTN’s Ambition 2025 strategy, the company has also made good progress to further increase the level of local ownership of MTN Ghana and MTN Uganda, with gross proceeds of R1.7-billion.

The group also completed the orderly exit of operations in Afghanistan and Guinea-Bissau, as part of portfolio optimisation and simplifying the group.

“We will continue on the execution of our Ambition 2025 strategy to drive growth and unlock value for all our stakeholders over the medium-term. The board anticipates paying

a minimum ordinary final dividend of 330c a share for the 2024 financial year,” Mupita concluded.

The group did not declare a dividend for the first half of 2024.