Published: 02 July 2025

South Africa is one of MTN's four biggest markets and service revenue growth remains stagnant in the single digits, says Sanlam Investments portfolio manager Roy Mutooni.

Mutooni said that although the South African market is big, it is also where the competitive pressure is greatest from Vodacom and Telkom.

"It's not like MTN South Africa is contracting. It's holding its own, just not growing," Mutooni told Business Day TV.

"Its service revenue growth is in the low single digits, whereas in its other major markets, service revenue growth is well ahead of inflation and well in the double digits."

MTN published a quarterly report in May for the period ending 31 March 2025, showing that its South African division's revenue decreased quarter-on-quarter and year-on-year.

MTN SA's quarterly revenue decreased from R13.3 billion in the fourth quarter of 2024 and R12.97 billion in the first quarter of 2024, to R12.56 billion - a 3.1% year-on-year decrease.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) also decreased by 2.6%, or 2.3% when excluding gains and losses from the disposal of towers.

Service revenue increased by 2.6% year-on-year from R10.4 billion to R10.7 billion, boosted by a 3.9% increase in data revenue, which contributed 48.3% of total service revenue.

MTN said this growth was due to the benefits of sustained network investment and dedicated customer focus.

"MTN South Africa continued to navigate competitive challenges, most notably in prepaid," the company stated.

It said the outlook for the South African economy was characterised by cautious optimism. Moderate inflation is expected in 2025, although GDP growth may remain subdued.

With interest rates broadly anticipated to decline further, MTN said this may benefit consumer health and business conditions. However, the competitive landscape, particularly in prepaid, is anticipated to remain heightened.

"In this context, MTN SA's prepaid service revenue development is expected to remain under pressure in the second quarter," the company said.

"However, the business started to drive refreshed regionally focused and personalised customer offers to recover value share. This will be supported by deepening initiatives to better leverage channel partners to enhance distribution."

MTN SA also adjusted prepaid prices in April 2025, complementing the February change to its postpaid tariffs.

Quarter-on-quarter, MTN SA's subscriber numbers declined from 39.8 million to 39.2 million. However, year-on-year, its total subscribers grew by 5.6% from a base of 37.1 million.

Postpaid customers were up by 6.7% to 4.4 million (excluding telemetry), buoyed by a stronger uptake of integrated voice and data plans, as well as home propositions.

Prepaid subscribers grew by 4.5% to 29.1 million, supported by customer value management initiatives, which MTN said continued to gain momentum.

Regarding MTN's fintech play, Mutooni said it has always been a challenging market in South Africa.

"It's bank-dominated. Most people are banked, so it's very difficult to introduce these alternative ways of paying for services," he said.

"Vodacom tried M-Pesa before. MTN is trying MoMo. You can see some of these things getting traction, but it will never be as significant as M-Pesa in a place like Kenya."

Nevertheless, he said MTN and Vodacom are giving fintech "a good go" to ensure their non-cellular businesses grow their contribution to earnings because they offer higher returns.

"It's still early. I think the right business model still needs to be found, but it's because the banks cleaned out that sector completely," Mutooni said.

Mutooni said that although MTN was a multinational and that it was more an "Africa story" than a South African one, he said 80% of its earnings come from four countries: South Africa, Uganda, Ghana, and Nigeria.

"If you are happy about the 80%, then it is unlikely that the other 20% will bring you down," he said.

He said that MTN was number one and by far the strongest investor in Nigeria. Nigeria's regulator also recently completed a process allowing prices to be increased.

"They've renegotiated their lease agreements, so it looks like a business nicely positioned for medium-term growth, well above averages," said Mutooni.

In Ghana, MTN is completely dominant in data and in voice. "They probably have 70–80% of the market there, and that's a growing market," he said.

"In Uganda as well. A smaller market, but a consistent generator. Mobile money is very good for them and generated a lot of earnings for them there."

Currency volatility has caused problems for MTN's operations in these countries in the past, but Mutooni predicted that this should no longer be an issue.

"We've had significant currency devaluations in the past year across most of Africa, and I think that has reset currencies to more reasonable levels," he said.
- mybroadband

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