Citi analyst Rohit Modi has raised the rating of MTN Group (MTNOF, Financial) from Neutral to Buy, reflecting increased confidence in the company's prospects. The upgrade comes with a new price target set at ZAR 162, suggesting a positive outlook for MTN Group's future performance.
MTNOF Key Business Developments
Release Date: May 12, 2025
- Group Service Revenue Growth: 19.8% in constant currency for Q1.
- Data Revenue Growth: 28.7% in constant currency.
- Fintech Revenue Growth: 25.2% in constant currency.
- EBITDA Margin: 44.1% in constant currency, up 5.3 percentage points.
- MTN Nigeria Service Revenue Growth: 40.4% in constant currency.
- MTN Ghana Service Revenue Growth: 39.5% in constant currency.
- MTN South Africa Service Revenue Growth: 2.6% year on year.
- Subscriber Base: Approximately 297 million, up 4.7% year on year.
- Active Data Subscribers: Increased by 9.1% to 162 million.
- Fintech Transaction Volumes Growth: 13.9% increase.
- Fintech Transaction Values Growth: 48.9% increase.
- CapEx Deployment: 7.5 billion with a CapEx intensity of 15.2%.
- Liquidity Headroom: 38 billion rand as of March 31.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MTN Group Ltd (MTNOF, Financial) reported a strong Q1 performance with a 19.8% increase in service revenue, driven by significant growth in data (28.7%) and fintech (25.2%).
- The company achieved a notable expansion in its EBITDA margin, which increased by 5.3 percentage points to 44.1% on a constant currency basis.
- MTN Group Ltd (MTNOF) saw a substantial increase in active data subscribers, up 9.1% to 162 million, and data traffic grew by 30.2% year on year.
- The fintech business showed robust growth, with transaction volumes increasing by 13.9% and transaction values by 48.9%, indicating strong demand for digital financial services.
- MTN Group Ltd (MTNOF) maintained a healthy balance sheet and liquidity position, with a consolidated net debt to EBITDA ratio of 0.7 times and a liquidity headroom of 38 billion rand as of March 31, 2025.
Negative Points
- MTN South Africa's service revenue growth was slower than expected at 2.6%, with prepaid performance under pressure due to competitive intensity.
- The company faces challenges in the South African market, particularly in the prepaid segment, where customer behavior remains value-seeking.
- Despite a 19.3% increase in data traffic, MTN South Africa's data revenue growth was only 3.9%, indicating potential pricing or competitive challenges.
- MTN Nigeria, while showing strong revenue growth, is still in negative equity, affecting its ability to declare dividends.
- The company is cautious about geopolitical risks and macroeconomic uncertainties that could impact its markets, particularly in relation to global aid funding and international trade.
