MTN Ghana upbeat on growth despite high inflation

MTN’s Ghana business says it is likely to grow by about a quarter for the full 2023 financial year even as it continues to battle high inflation and increased corporate and consumer taxes.

“We remain cautious about the outlook for the rest of the year in view of elevated inflationary pressures, although we are hopeful that the decreasing trend recorded in the latter part of the third quarter will continue throughout the fourth quarter,” MTN Ghana CEO Selorm Adadevoh said in a statement accompanying the unit’s third-quarter earnings to end-September on Wednesday. 

Still, the group faces ongoing risks including geopolitical developments, the potential for further increases in utility tariffs after 4.2% and 1.2% hikes in power and water rates respectively from September 1, and the removal of subsidies in terms of an IMF reform programme.

Having considered the prevalent and potential impact of high inflation, Ghana’s debt sustainability and seasonal currency volatility, MTN Ghana maintain its guidance for full-year revenue growth of between 25% and 29%. 

Earlier in the year, forecasts from the World Bank indicated that Ghana’s inflation for the year would be 29.4%. The IMF has since reported that Ghana’s three-year cumulative inflation rate stood at 92% as of December 2022, and is forecast to rise to 128% and 133% for 2023 and 2024.

Ghana’s official inflation rate was at the end of the third quarter was 38.1%, down from 42.5% in the three months ended June 30.

Against this backdrop, MTN's third-largest operation says it will continue to preserve liquidity, strengthen its balance sheet and explore cost-saving and cutting measures. 

Profit after tax in the review jumped 32% to 2.8bn cedis (R4.37bn) while service revenue was up 36% to 9.6bn, driven mainly by growth in voice, mobile data and fintech services. 

Earnings before interest, taxes, depreciation and amortisation (ebitda) rose 32.6% to 5.4bn cedis, with capital expenditure at 2.9bn cedis.

Over the past year, MTN reported being hit by the implementation of a 1.5% levy on mobile money transfers from May last year, despite a continued increase in users. The country’s finance ministry reduced the levy to 1% from January. 

MTN narrowly escaped paying a R13bn tax bill in Ghana three months ago. With state finances in disarray, the tax assessment was seen by some as a shakedown by a cash-strapped government.

MTN’s Ghana operation has also had to deactivate about a quarter of the SIM cards on its network as of May, to comply with a directive from that country’s regulators on biometric registration.

Since then, 600,000 SIMs have been re-registered, bringing the number of outstanding disconnected SIMs to 4.9-million at the end of September. That saw MTN Ghana’s subscriber base decrease 9.3% to 25.8-million.

gavazam@businesslive.co.za