By MTN, one of Africa’s largest telecommunications giants, is facing sluggish growth in South Africa, one of its four key markets. Despite maintaining its market position, the company’s service revenue growth remains stagnant in the low single digits, lagging behind its performance in other major African markets.
Sanlam Investments portfolio manager Roy Mutooni highlighted the challenges MTN faces in South Africa, where intense competition from Vodacom and Telkom has constrained expansion.
“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’s latest quarterly report for the period ending March 31, 2025, revealed a concerning trend in its South African operations. The company reported a 3.1% year-on-year revenue decline, with earnings dropping from R13.3 billion in Q4 2024 to R12.56 billion in Q1 2025.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) also fell by 2.6%, or 2.3% when excluding gains and losses from tower disposals.
Service revenue saw a modest 2.6% year-on-year increase, reaching R10.7 billion, primarily driven by a 3.9% rise in data revenue, which now contributes nearly half (48.3%) of total service revenue. MTN attributed this growth to sustained network investments and customer-focused strategies.
However, subscriber numbers declined quarter-on-quarter from 39.8 million to 39.2 million, though year-on-year growth stood at 5.6%. Postpaid customers increased by 6.7% to 4.4 million (excluding telemetry), supported by integrated voice and data plans. Prepaid subscribers grew by 4.5% to 29.1 million, but the segment remains under pressure due to fierce competition.
MTN acknowledged that South Africa’s prepaid segment is particularly competitive, impacting revenue growth. The company adjusted prepaid pricing in April 2025, following postpaid tariff changes in February, in an effort to regain market share.
“MTN South Africa continued to navigate competitive challenges, most notably in prepaid,” the company stated.
The economic outlook for South Africa remains cautiously optimistic, with moderate inflation expected in 2025. However, GDP growth is likely to stay subdued. Lower interest rates could improve consumer spending, but MTN anticipates continued pressure in the prepaid market.
“In this context, MTN SA’s prepaid service revenue development is expected to remain under pressure in the second quarter,” the company said.
To counter this, MTN is rolling out regionally focused and personalised customer offers while strengthening partnerships with channel distributors.
Beyond traditional telecom services, MTN has been pushing its fintech offerings, including its mobile money platform, MoMo. However, Mutooni noted that South Africa’s fintech sector remains challenging due to high banking penetration.
Despite these hurdles, MTN and Vodacom continue investing in fintech to diversify revenue streams.
While South Africa struggles, MTN’s operations in Nigeria, Ghana, and Uganda remain robust, contributing significantly to overall earnings.
MTN is Nigeria’s leading telecom operator, and recent regulatory changes allowing price increases have bolstered its outlook. The company has also renegotiated lease agreements, positioning itself for strong medium-term growth. In Ghana, MTN holds a commanding 70-80% market share in data and voice services, benefiting from a growing telecom sector.
Uganda, though a smaller market, provides steady earnings, with mobile money services playing a crucial role.
MTN’s South African operations face persistent challenges, particularly in the prepaid and fintech sectors. However, its dominance in Nigeria, Ghana, and Uganda provides a strong counterbalance.
Comments