MTN SA Ambition 2025 on track
● MTN South Africa is on track to meet most of its ambitious plans for 2025 but warns that it might fall short in its revenue contribution targets for the enterprise unit that focuses on providing technology and telecom services to corporates.
The mobile network operator has set some goals across all its markets with South Africa expected to have 5-million fintech customers, now sitting at 1.7-million, and 2-million home data subscribers.
“We are happy with the progress, and happy with what we have promised and are largely on target. There is still a long way to go before the end of 2025,” MTN SA CEO Charles Molapisi said.
He said the company’s fibre customers are still at about 60,000, but adding other alternatives like fixed-LTE routers, portable routers and dongles that are used to access internet at homes, means total subscribers have surpassed 1-million.
The operator is using multiple connections to reach home customers, such as air fibre wireless network, to provide a similar quality network and services as traditional fibre.
“We can do a whole lot more ... (however) in the end the question is, does the consumer care about how they are connecting the home, or about having access to data in the home? And our understanding is that the consumers just want to have access to the internet and they will devise the means that are affordable to them,” Molapisi said.
MTN had previously said to accelerate its fibre business it will need to make an acquisition. Molapisi said there are no discussions of an acquisition at this stage.
MTN SA is aiming for between 15% to 20% revenue contribution from the enterprise business by the end of 2025 but that may not happen, not due to underperformance but because other units are also doing well and growing total contributions.
The enterprise business continued to achieve double-digit service revenue growth, with 15.9% in the 2023 financial year.
“Our enterprise business has been growing in double digits for the past six years. We have had fantastic performances and that will continue. On our Ambitious 2025 plan, there may be one or two elements that we might miss, but overall I’m happy with our progress,” he said.
MTN group’s ambition is to have 100-million fintech subscribers across the markets where it operates by 2025. The bulk of the customers are expected to come from Nigeria, which is targeting 30-million to 40-million mobile money users — at the end of December the number was 14.5-million. MTN Group ended the year with active mobile money users of 72.5-million, up 5%. Fintech includes remittance, insurance, airtime lending and ecommerce.
Peter Takaendesa, head of equities Mergence, said while these are still ambitions and not necessarily targets, the operating environment has changed a lot since this particular ambition was shared. “The underlying operational performance is likely to progress nicely towards that ambition, especially in terms of subscribers, but actual returns to shareholders will be challenged as weaker cash generation and limited ability to upstream cash from Nigeria will limit cash returns to shareholders,” he said.
In 2024 MTN plans to spend about R9bn in SA to complete the installation of backup power at its base stations to ensure uninterrupted network availability during load-shedding, and on building more 4G and 5G sites. MTN SA’s network availability had improved significantly to about 95%.
The operator is no longer spending money on any 3G infrastructure and related equipment. Moreover, the number of 3G smartphones on its network is declining, said Molapisi.
It is working on switching off the 3G network in the next three to five years.
“We don’t invest in 3G technology any more because it is a very inefficient use of the spectrum. We are investing largely in 4G and 5G technologies and the number of 3G devices on the market right now on our network is shrinking every single day. There is a good chance that there will be a 3G switch off before a 2G switch off.”
Overall, MTN SA had a tough year in 2023 with the prepaid segment continuing to feel the pressure as consumers were spending less on airtime and data than before. More prepaid subscribers are borrowing airtime from the company, which they pay back through an extra fee added when they recharge.
Molapisi said the prepaid market is a multiSIM card and highly congested space. “Customers move from one value proposition to the next looking for offers. Moreover, given the pressure on disposable income, they are buying weekly bundles as opposed to monthly, or daily from a weekly.”
Takaendesa said the price increases in the contract subscribers segment should help offset the softer prepaid market, but it will be tough to grow profits. He said stronger economic recovery would also help strengthen the local unit.