Rédaction Africa Links 24 with Ray Mahlaka
Published on 2024-03-25 20:23:21
In 2023, MTN made significant investments totaling R10.1 billion in its telecommunications network to enhance resilience against disruptions such as Eskom blackouts. This investment was crucial as South Africa experienced unprecedented levels of blackouts during that year. Of the total investment, R2.6 billion was specifically allocated to initiatives aimed at preventing communication blackouts during load shedding events.
Telecommunications companies like MTN and Vodacom have been compelled to allocate additional funds towards making their networks more resilient as blackouts have intensified in recent years. These companies have invested billions in implementing backup electricity measures such as solar power, generators, and lithium batteries to ensure the continuous operation of cellphone towers, which are essential for mobile and internet connectivity.
The decision to prioritize backup electricity measures over potential profit generation demonstrates the commitment of these companies to keeping their customers connected even in times of increased blackouts. While the substantial investments in backup electricity could have been used to expand operations and increase earnings, MTN Group CEO Ralph Mupita emphasized that the sacrifice of profits was necessary to maintain network availability and reliability during Eskom blackouts.
As a result of these investments, MTN’s network availability improved to 95% by December 2023, up from just above 90% six months earlier. This enhancement in network reliability has contributed to mitigating the risk of customers switching to rival networks due to service disruptions. In 2023, MTN saw a 2.4% increase in its subscriber base in South Africa, totaling 37.4 million customers.
Looking ahead, Mupita anticipates concluding major investments related to network resilience during Eskom blackouts by the first quarter of 2024. This suggests that past investments in alternative electricity measures will continue to support MTN’s network operations in the future.
In terms of revenue mix, MTN’s financial performance in South Africa saw its service revenue grow by 2.5% to R41.8 billion. The company’s revenue streams showed a mixed trend, with a decline in outgoing voice call revenue but increases in data revenue, enterprise, wholesale, and fintech revenues. Data revenue accounted for a significant portion, 47.8%, of MTN’s service revenue, aligning with industry trends.
Despite facing challenges in Nigeria, MTN’s largest market, the company recorded a 13.5% increase in service revenue at a group level, amounting to R210.1 billion. However, the depreciation of the Nigerian currency, the naira, by almost 97% led to a substantial decline in MTN’s headline earnings and significant foreign exchange losses.
MTN operates in about 19 markets across Africa, where the volatility of local currencies can impact financial performance. Despite these challenges, MTN remained committed to rewarding investors with dividend payouts and saw growth in share value on the JSE. The company’s resilience and strategic investments have positioned it to navigate through the dynamic telecommunications landscape effectively.
Read the original article on Daily Maverick
