MTN Group, Africa's largest telecom operator, reported
a 15.4% decline in its service revenue to R177.8 billion
($9.8 billion) in 2024, reversing the steady growth of previous years. The
lowlight stayed with the Group's largest market: MTN Nigeria. Once its top
revenue generator out of 17 African markets, MTN Nigeria has lost its position for the first time since 2019,
slipping behind the West and Central Africa (WECA) region and South Africa.
For years, MTN Nigeria contributed nearly half of the
Group’s total revenue. But in 2024, foreign exchange losses and inflation have
dragged it into a post-tax loss of over ?400 billion ($266 million). The naira
devaluation has made network equipment, loan repayments, and operating costs
more expensive.
While MTN Nigeria generated ?3.3 trillion in service revenue, its value
collapsed when converted to dollars ($2.2 billion). This decline comes
notwithstanding MTN's increased investment in infrastructure upgrades in Q4
2024, which likely shows that the company may not be reaping any returns for
making investments in Nigeria. The slump could complicate the telecom
operator’s plans to invest more money into upgrading its core network
infrastructure planned for Q1 2025.
Less funding for expansion and network upgrades could
weaken MTN Nigeria’s position in the highly competitive market. However, as one
of the consistent top revenue drivers for the business—save for one slump—it is
unlikely that the Group company will deprioritise its Nigerian subsidiary where
it controls more than half of the telecom market.
The approved telecom tariff hike in Nigeria is a strong
positive for telecom companies like MTN Nigeria looking to recover losses in
the market. With Nigeria's growing data demand, the average revenue per user on data
services could see strong growth, tipping the scales for MTN Nigeria. Again,
compared to 2024, the naira has stabilised in recent months, which leads to
stable operating margins for the company. We wager that MTN will want to wait
out another quarter or two to see how its Nigerian business bounces back.
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