We operate in a diverse footprint that underpins our growth thesis and investment case. In determining our material matters, we consider our market context to understand the opportunity and risk set it presents. This in turn enables us to develop, execute and evolve our strategy as well as leverage our competitive advantages, including our scale, brand, presence and financial position.
In 2023, we assessed our market context (and how it has evolved) relative to our Ambition 2025 strategy that was developed in 2020 and the outlook at that time. We evaluated how developments in the operating context impact our strategy execution in the short, medium and long term as well as the mitigations required and the opportunities presented. In addition to the broader global environment, we consider our operating context in terms of how we manage the Group: South Africa and Nigeria; as well as our Markets portfolio – spearheaded by Ghana – namely WECA, SEA and MENA:
All material matters are relevant to all our markets
South Africa
South Africa is an attractive, relatively stable and mature market that offers particular opportunities in data, network sharing and enterprise services despite prevailing economic and sociopolitical pressures.
Macroeconomic/sociopolitical
- The economy grew by 0.6%. Inflation averaged 6.0% (2022: 6.8%), although the trend moderated in H2. The US dollar appreciated by an average of 12.5% against the rand, which impacted the cost of imports and also fed into inflation.
- Power shortages continued to impact the economy, putting pressure on consumers and business. In 2023, there were 335 days of loadshedding, from 205 in 2022.
- General elections in May 2024 could present some uncertainties.
Competitive/regulatory
- MTN has the second-largest market share in an increasingly data-dominant market where prepaid growth in the market has been muted in the past five years in a highly competitive environment. Postpaid has remained relatively resilient, although MVNOs have continued to be a feature in the competitive and pricing environments.
- Ability to increase prices – The regulatory environment largely enables operators to manage pricing, both to remain competitive and recover escalating opex and capex requirements.
- 5G remains an exciting MT and LT opportunity for growth, particularly FWA/HBB. Industrial use cases show potential; handsets and coverage are the key dependency for consumer use cases.
- Home – The sector relies on the infrastructure of two operators. Fixed wireless access (FWA) is popular among fixed operators, but fibre to the home (FTTH) connections are growing faster.
- Fintech – The country's advanced banking sector poses challenges to more rapid scaling, however MTN is driving growth through compelling and niche offerings.
- Network resilience has been a key focus of operators' network investments. In 2023, MTN SA largely completed our comprehensive network resilience investment, boosting our competitive position.
Relevant risks
Sources: National statistics offices; Fitch; Standard Bank; Carnegie; World Bank, IMF; AfDB; Reuters and Enterprise Risk Management Academy.
Nigeria
Amid political and economic reforms, Africa's largest population presents compelling growth opportunities, particularly in data and fintech. Challenges in the ST include the naira's depreciation, forex shortages and elevated inflation.
Macroeconomic/sociopolitical
- Economic growth slowed to 2.7% in 2023 from 3.1% in 2022. The floating of the naira in
June 2023 led to a 96.7% devaluation, severe forex liquidity constraints and higher inflation (28.9%) and interest rates. For 2024, the growth projection is seen at 3.2% and inflation at 26.3%. The naira is expected to stabilise as forex liquidity improves.
- Oil supply challenges and commodity price volatility create uncertainty for fiscal revenue, and hence government debt and spending.
- Unemployment and underemployment mean social stability is in focus.
Competitive/regulatory
- MTN is the market leader, with credible competition from the next-largest operator. Customers continue to shift from conventional voice to data-rich services. NIN-SIM registration regulations in the market present ST headwinds to subscriber base development however, will result in a more robust subscriber registration framework in MT the and LT.
- Ability to increase prices – Operators are engaged with authorities through the industry body regarding a review of headline tariffs in its service offerings.. Given elevated inflation and energy prices and volatile exchange rates, an appropriate level of pricing is required for the MT and LT sustainability of network investment and the industry. In the ST, tariff reviews will be necessary to help operators navigate the severe volatility playing out in the macro environment.
- 5G – MTN was the first operator to launch 5G network in Nigeria, providing coverage in key cities in the six geopolitical regions in all states.
- Home – The FTTX market is nascent, however we have expanded our HBB penetration, leveraging our 5G fixed wireless access devices, mobile broadband solutions and FTTH connectivity.
- Fintech – MTN faces competitive headwinds from telco and OTT operators, however is poised for robust and sustained growth over the MT and LT. The growth outlook is supported by a growing youthful population, low banking penetration and rising smartphone penetration.
Relevant risks
Sources: National statistics offices; Fitch; Standard Bank; Carnegie; World Bank, IMF; AfDB; Reuters and Enterprise Risk Management Academy.
Ghana
MTN's biggest fintech market, with opportunity for greater uptake of more advanced services. MTN Ghana is doing well to manage risks and drive growth given the macro challenges, including elevated inflation and FX volatility, headwinds to economic expansion as well as greater regulatory scrutiny since being designated as a significant market power (SMP).
Macroeconomic/sociopolitical
- The economy faced several challenges, including elevated inflation, with an average monthly rate of 40.3% (2022: 31.5%). Higher utility costs along with the 38.5% depreciation of the cedi contributed to the challenges.
- Economic growth slowed to 2.9% in 2023 from 3.1% in 2022. Unemployment and interest rates remain high. Wages are not keeping up with increase in prices, exacerbating poverty (27%).
- A July 2023 by-election led to a hung parliament, likely slowing reforms.
Competitive/regulatory
- MTN is the leader in the market, with strong growth in data and fintech services. MTN Ghana has been declared as an SMP, which attracts greater regulatory oversight and the requirement to implement remedies in line with regulatory directives. SIM re-registration - Completed in May 2023, this led to a decline in the overall subscriber base.
- Consolidation - One competitor rebranded in 2023 and another smaller operator was acquired by a large competitor.
- Ability to increase prices - Amid elevated inflation, MTN has been able to effect regular regulator-approved tariff adjustments to safeguard its sustainability amid elevated opex and capex burdens.
- 5G - Economic challenges have resulted in a decline in investment from smaller operators in the market, as well as a ST delay in the rollout of 5G.
- Home - We see opportunity to leverage our network to partake in this segment of the market.
- Fintech - The market leader, MTN MoMo's ecosystem and user numbers continue to grow with greater uptake of advanced services.
Sources: National statistics offices; Fitch; Standard Bank; Carnegie; World Bank, IMF; AfDB; Reuters and Enterprise Risk Management Academy.
WECA
WECA is home to eight MTN operations, including Ghana (see separate commentary). Operations are impacted by political uncertainties and regional conflicts, although the WECA boasts comparatively well-established fintech businesses, supported by stable inflation and FX in some of the larger markets.
Macroeconomic/sociopolitical
- Economic growth slowed in 2023. Unemployment remains high, as do budget deficits. In 2024, economic growth is expected to pick up, inflation is seen moderating and current account balances are forecast to improve.
- Political instability is a feature of several countries in the region, with recent coups in Burkina Faso, Chad, Gabon, Guinea-Conakry, Mali and Niger impacting livelihoods and investment. Although MTN operates in only one of these markets, the rest of these countries neighbour MTN markets, presenting regional geopolitical risks.
Competitive/regulatory
- MTN is the leader in five of the eight WECA markets (and second in the others), where mobile uptake is strong and fintech services are popular, with a contribution of 27.7% to service revenue.
- The regulatory environment for telecoms, digital and fintech is complex and dynamic, but governments are also intent on increasing connectivity and digitising societies. Data sovereignty and privacy are increasingly topical.
- Ability to increase prices – Amid economic and regulatory pressure, increasing prices is difficult.
- 5G – Competitors are launching 5G in major cities in Côte d'Ivoire and Benin.
- Home – Investment in fibre is increasing, driving penetration as data demand grows.
- Fintech – Sector is growing, with increased adoption and investment and the entry of a new competitor leading to an evolution of fees by incumbents.
Relevant risks
Sources: National statistics offices; Fitch; Standard Bank; Carnegie; World Bank, IMF; AfDB; Reuters and Enterprise Risk Management Academy.
SEA
SEA hosts six MTN operations, including equity-accounted Mascom and MTN eSwatini. The operations continue to deliver healthy operational and financial results in the context of increased regulatory scrutiny
and competitive intensity, as well as the crisis in South Sudan. The region offers an exciting demographic opportunity, with a fast‑growing, youthful population, with growing data and 4G coverage,
fintech and digital adoption.
Macroeconomic/sociopolitical
- Economic growth was slow in 2023. The annual blended inflation in SEA averaged 10.0%, compared to 14.3% in 2022. Consumer spending was limited by inflation and low consumer disposable incomes across the region. This was exacerbated in South Sudan by the displacement crisis and in Rwanda by currency depreciation and aggressive regulatory interventions.
- Except for South Sudan, the SEA society is mostly stable, despite widespread unemployment and inequality as well as, in eSwatini, the risk of more anti-monarchy protests.
- The removal of Uganda from the African Growth and Opportunity Act (AGOA) after the passing of the Anti-Homosexuality Act may impact Ugandan exports and tourism.
Competitive/regulatory
- We are the market leader in all our SEA Opcos. Regulations are increasing, with Uganda imposing a 5% tax on foreign companies providing digital communications and Rwanda considering levying VAT on online services.
- Consolidation – This trend remains a feature in some of our SEA markets.
- Ability to increase prices – While there is scope to engage regulators on price increases in some markets, competition pressures are a key consideration.
- 5G – MTN is rolling out 5G in Uganda and Zambia. In Zambia, a new operator has also launched 5G.
- Home – The market is nascent, but strong data growth is seen driving demand for fibre networks.
- Fintech – Ongoing regulatory obligations and interventions remain key factors being managed in SEA, with the growth outlook underpinned by rapidly increasing adoption and usage of fintech services.
Relevant risks
Sources: National statistics offices; Fitch; Standard Bank; Carnegie; World Bank, IMF; AfDB; Reuters and Enterprise Risk Management Academy.
MENA
MTN operations in MENA are in Sudan, Afghanistan and Iran (minority-held joint venture). We announced the completion of our exit from Afghanistan with FY 2023 results. High inflation and rising food prices, as well as FX volatility, pose challenges to economies across the region, as do the risks of a spillover from the conflict in Gaza. The large youthful population and the growing middle class offer opportunities for growth.
Macroeconomic/sociopolitical
- Since the coup in October 2021, the political environment in Sudan has been unstable and many services – including access to the internet – have been disrupted. In Iran, the sociopolitical and economic conditions have been tough, putting consumer spending under pressure. The risk of exposure to sanctions continues.
- Economic growth slowed in 2023, and the economy of Sudan contracted. The economies of Iran and Sudan were assessed to be hyperinflationary.
Competitive/regulatory
- The mobile market across these three MTN operations differs markedly, with penetration highest in Iran and lowest in Afghanistan. MTN is the market leader in Afghanistan, and the second-largest operator in the other two MENA markets. Early in 2024, MTN Group completed the disposal of MTN Afghanistan.
- The regulatory environment for telecoms, digital and fintech is complex and dynamic, but governments are also intent on increasing connectivity and digitising societies. Data sovereignty and privacy are increasingly topical.
- Ability to increase prices - Obtaining regulatory approval for pricing increases has been challenging in the current economic environment.
- Home - Investment in fibre is driving penetration as data demand grows.
- Fintech -Sector is growing by 20%, with increased adoption and investment.
Relevant risks
Sources: National statistics offices; Fitch; Standard Bank; Carnegie; World Bank, IMF; AfDB; Reuters and Enterprise Risk Management Academy.
For details of the ways in which we are responding to and managing the factors in our operating context, see Our Ambition 2025 strategy to Our strategic performance. We discuss how our Ambition 2025 strategy remains relevant to navigating the ST volatility and positions us to capture the MT and LT opportunities.
