MTN Group (JSE:MTNJ), the South Africa-based telecommunications giant, reported a 11.2% increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the nine months ending September 30. This growth came despite a year-to-date EBITDA margin decrease to 43.2%, affected by factors such as inflation, forex depreciation, network resilience costs, and the conflict in Sudan. The company managed to offset these challenges with cost savings of R1.5 billion ($103 million).
The third quarter results were notably influenced by the devaluation of the Nigerian naira amid volatile forex markets. Nevertheless, MTN saw its active data subscribers grow by 6.7% to 144.6 million out of a total of 290 million subscribers across its 19 markets. This growth persisted despite new registration regulations introduced in Ghana and Nigeria.
Service revenue for the company grew by 14.2%, driven by steady growth from MTN South Africa (2.6%), strong growth in MTN Nigeria (21.4%), and significant growth in MTN Ghana (36.6%). Meanwhile, fintech transaction volumes rose by 33.9%, and Mobile Money (MoMo) active users increased by 0.7%.
Despite these positive figures, the company's share price dropped by 2.29%. To strengthen its financial position, MTN Group invested R26.2 billion in capital expenditure year-to-date and announced plans for a minimum FY2023 dividend of 330 cents per share.
Looking ahead, under its Ambition 2025 strategy, MTN Group aims to achieve future savings of R7 billion to R8 billion over three years from FY2024. The company also maintains a healthy liquidity position of R45.6 billion and is working on improving top-line growth and profitability in MTN South Africa. In addition, MTN Nigeria has launched a new data bundle mix strategy to further boost its market presence.
InvestingPro Insights
Drawing from real-time data and insights from InvestingPro, it is clear that MTN Group is showing promising signs in the market. The company's high earnings quality is evident, with free cash flow exceeding net income. This is a strong indicator of the company's financial health and its ability to generate cash, a key factor for investors.
InvestingPro data also points to accelerating revenue growth for MTNJ. This aligns with the reported 14.2% increase in service revenue in the article, driven by growth in MTN South Africa, Nigeria, and Ghana.
Finally, the company yields a high return on invested capital, which is a testament to its effective use of capital to generate profits. This is a crucial metric for investors as it provides insight into how well a company is using its money to generate returns.
In terms of InvestingPro Tips, the strong earnings should allow management to continue dividend payments. This aligns with the company's announcement of a minimum FY2023 dividend of 330 cents per share. Additionally, the company is a prominent player in the Wireless Telecommunication Services industry, which is consistent with its significant growth in various markets.
For more insights like these, InvestingPro offers a total of 14 additional tips for MTNJ, providing an even more comprehensive understanding of the company's financial landscape.
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