MTN Ghana forecasts strong growth despite inflation

MTN expects to grow revenue by about a quarter for the next three to five years in Ghana, even as the telecom group continues to fight the effects of high inflation in the West African country.

On Thursday, the company’s third-largest business said it maintained its medium-term guidance of high 20s — in percentage terms growth — in service revenue.

Throughout 2023, the Ghanaian economy faced challenges including a high average monthly inflation rate of 40.3% compared with 31.5% in 2022. 

But the tide appears to be turning for the better. 

The macroeconomic outlook for Ghana for the rest of 2024 was expected to remain challenging due to high inflation, currency volatility and foreign exchange scarcity, which could affect economic growth and living costs for Ghanaians, MTN said as it reported first-quarter earnings.

The government forecasts inflation for the year at 13% to 17%, before gradually trending back to the medium-term target range of 6% to 10% by 2025.

Against this backdrop, MTN Ghana delivered a strong performance in the quarter to end-March, with profit rising almost 50% as service revenue grew 32.4%.

Total revenue for the quarter to end-March was 32.5% higher at 3.85-billion cedis (about R5.23bn), while profit after tax rose to 1.11-billion cedis from 745.4-million cedis a year ago. Service revenue grew by 32.4% to 3.83-billion cedis.

Mobile subscribers rose 1.2% to 27.8-million and active data subscribers 15.3% to 16-million. Active Mobile Money (MoMo) users rose 16.1% to 15.6-million, the company said on Thursday.

Challenging economy

CEO Stephen Blewett said the group had operated in a challenging economy in an election year. Inflation remained relatively high, though on a generally declining trend, with the average inflation rate within the first quarter of 24.2%.

The effects of inflation on consumers and businesses were worsened by the increase in the prices of petrol and diesel.
The Ghanaian cedi has depreciated by 8.44% year to date against the US dollar.

“MTN Ghana continued to deliver on its Ambition 2025 priorities, despite the challenges from the macroeconomic headwinds affecting business operations and expenses. These include driving top-line growth and cost efficiencies, as well as creating shared value for all stakeholders,” said Blewett . 

“These efforts underpinned a strong first quarter 2024 result, with service revenue growth of 32.4% year on year and a resilient ebitda [earnings before interest, taxes, depreciation and amortisation] margin.” The ebitda margin for the period was 55.9% from 56.3% a year ago.

Looking ahead, the company expects the macroeconomic outlook for Ghana for the rest of 2024 to remain challenging due to high inflation, currency volatility and foreign exchange scarcity, which could affect economic growth and living costs.

MTN Ghana will continue to invest to develop its platforms and improve its network and services, and to unlock value for stakeholders in line with its Ambition 2025 strategy.

“We continue to explore efficiency measures, preserve liquidity and strengthen the balance sheet against a background of election-year-related and macroeconomic uncertainties,” it said.

Despite the economic challenges, MTN’s Ghana operation has fared better than its Nigeria business.

Earlier in the week, MTN Nigeria reported a loss of 392.7-billion naira after tax for the quarter, compared with a profit of 108.4-billion naira in the matching period a year ago.

MTN Nigeria is the group’s largest business. 

Update: May 2 2024
This story has been updated with new information. 

mackenziej@arena.africa