MTN Group Ltd. Has disclosed its plans to hike prices in some markets across the African continent as the Telco giant continues to grapple with inflationary pressures on the continent.
In a trading update, MTN Group, Africa’s largest wireless carrier which operates across 19 countries including South Africa, Nigeria and Ghana noted that it will continue to talk to regulators over the proposed price increases.
“Inflation across MTN’s footprint averaged 18.5% during the first quarter, compared with 11.5% a year earlier. Within this environment of elevated inflation, implementing selective price increases across the portfolio remains a critical priority.”
Ralph Mupita
MTN Chief Executive Officer Ralph Mupita, emphasized that Russia’s war in Ukraine and the impact of debt accumulated during the Covid-19 pandemic on the region’s currencies has fueled inflation in Africa.
In MTN’s home market of South Africa, a worsening series of power cuts has also contributed to price pressures, stunting economic growth and spending in the country. In Ghana, where inflation was over 50% earlier in the year, interest rate increases are making it more difficult for consumers to afford credit.
Inflation in Ghana
But despite the high inflation rate recorded in the country earlier this year, inflation in Ghana has been a downward trend falling by as much as 1,120bps (11.2%) from 52.4% to the current 41.2% as at end-April 2023.
MTN Ghana in 2022 also recorded strong returns on its operations in the country posting net profit of some GHS 745m ($68.3m).
MTN’s 1.3% domestic 1Q service revenue growth suffered from power shortages as highlighted by the company earlier, yet could improve later in 2023 following price rises in April and actions to improve its electricity supply. Possible exits from three West African operations (2.6% of 2022 revenue and 1.8% of Ebitda) make sense, fitting with the simplification strategy and potentially bringing in cash, which can be used to boost shareholder returns.
MTN revenue rose 15% from a year earlier to 53 billion rand ($2.8 billion) in the first quarter, the company said.
Capital expenditure for the year will remain at 37.4 billion rand, despite the potential impact of local exchange rates weakening against the dollar and accelerated work in South Africa to improve its network resilience in response to the power cuts.
Meanwhile, last week, Mupita said “We anticipate that trading conditions across markets will remain challenging for the remainder of 2023.”
MTN further hinted that it is evaluating an exit from Guinea-Bissau, Guinea-Conakry and Liberia in West Africa over the medium term. The group has received an offer for its equity interests in those three units from Asian Telecom, which is being evaluated, it said, confirming an earlier Bloomberg report.
MTN Group Limited is a South African multinational mobile telecommunications company, operating in many African and Asian countries. Its head office is in Johannesburg. As of December 2020, MTN recorded 280 million subscribers, making it the 8th largest mobile network operator in the world, and the largest in Africa.
READ ALSO: UK Sends Storm Shadow Missiles To Ukraine
