Nigeria, Africa’s most populous nation and largest economy is undergoing a series of economic reforms that could positively impact MTN Group Ltd., the continent’s biggest wireless company.
MTN Group CEO Ralph Mupita said that the reforms, initiated by President Bola Tinubu, who took office in May 2023, were necessary to address macroeconomic imbalances and restore stability. He added that the company was taking a “constructive” view of Nigeria’s medium-term prospects and expected the country to overcome the short-term “pain” of the reforms by mid-2024.
The reforms include reorganizing the country’s foreign-exchange system, abolishing costly gasoline subsidies, and boosting tax revenue. These measures aim to reduce inflation, which reached 22.6% in October 2023 and improve the availability of foreign currency, which has been scarce due to low oil prices and the impact of the COVID-19 pandemic.
The International Monetary Fund (IMF) welcomed the reforms and forecast that Nigeria’s economy would grow by 3.1% in 2024, compared to 2.9% in 2023. The IMF also said that the reforms would lead to “stronger and more inclusive growth” and urged the government to implement further steps, such as creating ethical standards, ensuring transparency and accountability, and fostering public awareness and education on the benefits of the reforms.
MTN Group operates in 19 markets across Africa and the Middle East and has a significant presence in Nigeria, with 83.8 million subscribers and 31.5 million active mobile money users as of September 2023. The company reported a 5.6% increase in service revenue in Nigeria in the first nine months of 2023, driven by data and fintech services growth. However, the company also faced regulatory fines, network disruptions, and currency depreciation challenges.
Mupita said that MTN Group was committed to investing in Nigeria and supporting its digital transformation. He said that the company had invested 1.6 billion rand ($108 million) in capital expenditure in Nigeria in the third quarter of 2023 and planned to spend another 1.5 billion rand ($101 million) in the fourth quarter. He also said the company was exploring opportunities to expand its fintech offerings, such as mobile banking, insurance, and e-commerce, in Nigeria and other markets.
MTN Group’s performance in Nigeria and other key markets, such as South Africa, Ghana, and Uganda, helped the company achieve a 9% increase in group service revenue in the first nine months of 2023. The company also reported a 2.8% increase in group earnings before interest, tax, depreciation, and amortization (EBITDA) and a 2.5 percentage point improvement in group EBITDA margin. The company said it was on track to meet its medium-term targets and achieve its ambition to become a leading digital solutions provider for Africa’s progress.
Source: Bloomberg
