MTN plans to invest between $300 million and $350 million in capital expenditure (capex) in South Africa to enhance its competitiveness within the prepaid market segment.
This allocation represents 19% of the MTN Group’s total capex and is approximately $163 million to $215 million less than its expenditure in South Africa during the previous financial year. In comparison, Vodacom has announced plans to invest between $580 million and $590 million into its network this financial year.
Network quality is closely linked to an operator’s capex, which covers the costs of maintaining and upgrading its infrastructure. Deploying new sites and implementing advanced mobile network technologies—such as 5G, 4×4 MIMO, 3CC (3 Carrier Combining), and 256QAM—requires substantial investment. Consistent investment is crucial; without it, a mobile network’s performance may lag behind competitors.
Over recent years, both MTN and Vodacom have invested close to $530 million annually in capex, occasionally nearing $640 million, underscoring the importance of remaining competitive in network quality.
A significant portion of this investment has been directed towards network resilience, ensuring sites remain operational during load shedding and other power outages.
Currently, MTN boasts the best overall mobile network in South Africa. However, this advantage could diminish if the company reduces its network investments.
According to MyBroadband Insights’ 2024 Mobile Network Quality Report, based on 1.17 million speed tests conducted by 18,649 mobile data users across South Africa between January 1 and December 31, 2024, MTN leads in network quality.
MTN Group CEO Ralph Mupita has stated that the reduction in capex should not impede the network’s growth. He emphasised that MTN has sufficient capacity and aims to see returns on its $240 million investment in network resilience.
Mupita also noted strong performances in the network’s postpaid, enterprise, digital, and fintech offerings during the past financial year.
However, he acknowledged challenges in the prepaid segment, particularly in two major provinces in South Africa, though he did not specify which ones.
MTN South Africa CEO Charles Molapisi confirmed that the company’s prepaid challenges are confined to these two regions, while other areas are experiencing decent growth. Molapisi expressed confidence that a $380 million capex budget would maintain MTN SA’s competitiveness.
Despite challenges in certain parts of the country, MTN reported a 5.5% increase in consumer prepaid customers by the end of December 2024 and a 0.8% growth in service revenue. The company also observed a 9.5% year-on-year increase in prepaid data consumption and a substantial 36.5% rise in postpaid data usage, largely attributed to residential customers’ adoption of fixed wireless access products.
MTN South Africa’s overall revenue grew by 1.5%, from $2.75 billion to $2.79 billion, while service revenue increased by 3.1%, from $2.23 billion to $2.30 billion, despite a 5.5% decline in voice revenue. Earnings before interest, taxation, depreciation, and amortization (EBITDA) in South Africa rose by 5.1%. Excluding gains from the disposal of towers and $11.3 million from the sale of insurance receivables, EBITDA increased by 4.4% year-on-year.
MTN reported a 6.4% increase in subscribers, reaching 39.8 million, with a net addition of 2.4 million during the year. Postpaid subscribers, excluding telemetry, grew by 6.1% to 4.3 million, driven by stronger uptake of home propositions and integrated voice and data plans.
Looking ahead, MTN South Africa plans to continue evolving its data propositions, focusing on 5G, to enhance market value share and accelerate revenue growth. The company also prioritizes executing its home strategy to boost growth in residential customers on both fiber-to-the-home (FTTH) and fixed wireless access (FWA) services.
As key enterprise contracts come up for renewal, MTN SA anticipates some short-term pressure on margin performance but expects initiatives to accelerate enterprise revenue expansion, supporting margin recovery as the year progresses. The company’s priority is to recover profitability and cash flow, underpinned by a focus on accelerating top-line growth and improving EBITDA margin toward its medium-term targets.
In summary, MTN’s strategic investments and focus on network quality aim to maintain its competitive edge in South Africa’s telecommunications market, despite challenges in specific segments.
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