MTN share price holds up after mixed interim results

Key takeaways

1. Impact of macroeconomic conditions

In the first half of 2024, MTN’s financial performance was significantly impacted by challenging macroeconomic conditions, leading to a 20.8% decrease in group service revenue to R85.3 billion and a 41.2% decrease in EBITDA to R29.0 billion.

2. Growth through fintech and data services

MTN's expansion of its fintech platform was a major growth driver, with data traffic and fintech volumes rising by 35.7% and 18.0%, respectively.

3. Strategic priorities and cost efficiencies

MTN aims to accelerate expense efficiencies, targeting R7-8 billion in cost savings over the next three years. Restoring profitability and improving the balance sheet in Nigeria remain critical, with tariff increases seen as essential for recovery.

4. Sustaining growth in key markets

MTN plans to sustain growth in markets like Ghana, Uganda, and Cameroon, while implementing turnaround strategies in Côte d'Ivoire, Rwanda, and Zambia. Leveraging partnerships, such as with Mastercard, will be key to expanding and monetizing the fintech platform further.

5. Medium-term guidance and capex plans

MTN has maintained its medium-term guidance, with expected capex for FY 2024 ranging from R28-33 billion. The group is committed to executing its Ambition 2025 strategy, driving growth and creating value for stakeholders while navigating economic uncertainties.

Macroeconomic impacts on financial performance

In the first half of 2024, MTN demonstrated strong commercial momentum, achieving solid growth within its portfolio. Despite a challenging macroeconomic environment, the group's strategic initiatives, including localizations and orderly market exits, contributed to robust advanced services growth on its fintech platform. However, these positive developments were somewhat overshadowed by macroeconomic impacts on financials. Group service revenue decreased by 20.8% to R85.3 bn, while EBITDA (before once-off items) decreased by 41.2% to R29.0 bn. The EBITDA margin also dropped to 32.0% from 43.6% in the prior year. Basic earnings per share (EPS) and headline earnings per share (HEPS) decreased significantly to -409cps and -256cps, respectively.

Driving growth through fintech and data services

MTN's continued expansion of its fintech platform was a key driver of growth. Data traffic and fintech volumes increased by 35.7% and 18.0%, respectively, reflecting the group's focus on executing commercial initiatives aligned with its Ambition 2025 strategy. The group rolled out significant capital expenditure (capex), deploying R13.4 billion with a capex intensity of 14.8%. This investment facilitated the addition of 1,556 4G and 829 5G sites, boosting network quality and competitiveness. The fintech business reported an EBITDA margin within the targeted mid to high-30% range, with advanced services seeing a 58.2% increase.

Outlook and future priorities

Looking forward, MTN remains focused on executing its strategic priorities amid macroeconomic and geopolitical challenges. The group aims to accelerate expense efficiencies, targeting R7-8 billion in cost savings over the next three years. MTN Nigeria will continue initiatives to restore profitability and improve its balance sheet, with tariff increases viewed as critical for recovery. Additionally, MTN seeks to sustain strong growth in markets like Ghana, Uganda, and Cameroon, while turning around performance in Côte d'Ivoire, Rwanda, and Zambia. The company plans to leverage partnerships, such as with Mastercard, to expand and monetize its fintech platform further. MTN has maintained its medium-term guidance, with anticipated capex for FY 2024 in the R28-33 billion range, as it drives growth and value creation for stakeholders through the execution of its Ambition 2025 strategy.

MTN – technical analysis

The share price of MTN remains in a long term downtrend, although in the short term we are seeing a rally towards a confluence of resistance and the 200 day simple moving average at 9130. Traders will want to watch how the price handles this level.

A close above could suggest the longer term downtrend to be broken, and place resistance at 9905 as the next upside target from the move.

Should the price not manage to break above the 200MA, and instead form a bearish price reversal before reaching this level, the longer term downtrend would be assumed as remaining in play. In this scenario, gap support at 7750 would become the initial target from the move, while a close above the reversal high might be used as a stop loss indication.