MTN, a telecommunications company, has announced that it intends to raise prices in certain markets due to elevated inflation in the operating environment.
This was revealed in the company’s first-quarter report, which was filed with the Johannesburg Stock Exchange on Thursday, Punch reports.
“We anticipate that trading conditions across markets will remain challenging for the remainder of 2023,” the MTN group said in its outlook for the rest of 2023. “We will continue to execute on our proactive measures to manage the near-term challenges and risks.”
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“In this environment of elevated inflation, selective price increases across the portfolio remain a critical priority to ensure that operations generate sufficient cash flows to fund future capital expenditure required for building world-class networks.”
“We will continue to have the necessary engagements with regulatory authorities on such needed increases.”
The telecom company, which operates in 19 countries including South Africa, Nigeria, and Ghana, reported that blended inflation across its footprint remained high, averaging 18.5% in Q1 2023, up from 11.5% in Q1 2022. Interest rates rose during the period as central banks sought to contain inflation. Higher inflation and interest rates reduced consumer spending power and hampered business activity, according to the company.
According to MTN Chief Executive Officer Ralph Mupita, “MTN’s resilient business model and operational execution enabled us to successfully navigate difficult macroeconomic, geopolitical, and regulatory conditions in Q1 2023.”
“Local currencies generally fell against the dollar, and foreign exchange availability was limited in several of our key markets, slowing capital expenditure and limiting our ability to upstream dividends and management fees.”
“Over and above reduced economic activity in South Africa, MTN South Africa’s (MTN SA) network availability remained under pressure due to ongoing power outages across the country: there were approximately 90 days of load shedding in Q1 2023 compared to 14 days in Q1 2022.”
“MTN Nigeria drove strong commercial momentum in a challenging operating environment to deliver a strong financial performance in the period,” the group said of the Nigerian market.
“In addition to higher inflation and interest rates, as well as difficulties in obtaining hard currency liquidity, the Nigerian economy was also impacted by the Central Bank of Nigeria’s redesign and introduction of new naira notes on December 15, 2022.” Due to the limited availability of new notes, customers were unable to recharge through physical channels or transact within the MoMo agent network.”
MTN Group stated that, in accordance with its Ambition 2025 strategy, it constantly evaluates investments in order to improve returns and reduce risk. As a result, MTN Group is considering an orderly exit from three West African operations in the medium term: MTN Guinea-Bissau, MTN Guinea-Conakry, and MTN Liberia. Axian Telecom has made an offer for our equity stakes in these Opcos, which is being considered by the Group.
In addition, the company is exiting Afghanistan by selling MTN’s entire shareholding to a wholly-owned subsidiary of M1.
According to the report, MTN revenue increased 15.6% to 53.83 billion rand ($2.8 billion) in the first quarter of 2023, up from 45.69 billion rand in the first quarter of 2022.
Culled from Punch
