MTN Group Limited
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Mcebisi Jonas
Group Chairman
Remaining resilient despite ongoing volatility in our external environment
2023 once again showcased the resilience of the MTN business model and Ambition 2025 strategy as we navigated through continuing volatility in our macro-environment. It was also a tough year from a macroeconomic perspective, with higher-than-forecast global inflation averaging an estimated 6.8% (2022: 8.7%) and a sharp depreciation of many of the currencies in our key markets, where foreign exchange (forex) availability remained a significant challenge. According to the IMF, global growth slowed to an estimated 3.1% from 3.5% in 2022.
The cost and supply of energy remained a hot topic across the tech and telecoms industry, while the trend of greater regulatory scrutiny and interventions continued to impact our business. In addition, the global geopolitical landscape in 2023 was distinguished by fraught international relations, including conflicts in Ukraine, Sudan, parts of West Africa, and the Middle East.
Political instability is a feature of several countries on our continent, with the recent coups in Burkina Faso, Chad, Gabon, Guinea-Conakry, Mali, Niger and Sudan disrupting life and discouraging investment. Although MTN only operates in two of these markets, the rest of these countries are neighbouring MTN markets. We monitor developments closely and work to ensure that our people and customers are safe and that our services are uninterrupted.
Fiscal pressures and debt tightening have added to the already-strained public finances of economies throughout our markets. In this environment, many African governments have sought new ways to generate revenue, among them broadening the tax base and increasing tax types and rates. At MTN, we monitor these developments carefully, seeking to manage the associated risks carefully and continuing to engage with revenue authorities and other relevant stakeholders.
In this context, it would be easy to feel overwhelmed; however, at MTN, we stayed focused on our strategic intent of 'leading digital solutions for Africa's progress' and on our belief that 'everyone deserves the benefits of a modern connected life'. These remained our guide as we continued to mitigate the risks and navigate the challenges of our operating context. We concentrated on the exciting opportunities present across the continent we call home. In this IR, you will read more about the operating environment in 2023 (Our market context), MTN's strategic delivery (Our strategic performance dashboard), and the outlook (Our outlook) for the business. I also refer readers to the comprehensive material matters and risk sections on Material matters impacting value creation to Artificial intelligence (AI) and Risk Management and Compliance Committee Chair’s review to Top risks to value creation, respectively.
Suffice to say, the business managed these circumstances well and recorded a solid performance in 2023, strategically, financially and by many other measures. The Q&A with the CEO and the CFO give details of this performance, which speaks to encouraging underlying operational momentum and was produced under the careful guidance of the Board of Directors. The SR and TR the provide details for those readers who require more details on the Group's broader performance.
Continuing to invest in the socioeconomic development of our nation-states
Our operating and financial performance was underpinned by substantial investments in our networks, as we increased our broadband network coverage to reach 89.2% - this equates to a population coverage of around 559 million people across our markets. This signified meaningful progress toward our objective of providing 95% broadband coverage by 2025. Given the importance of this priority, shareholders would note that we have linked this to executive remuneration within our ESG measures.
This sets important context, as I spend much of my time engaging with stakeholders from across our markets. In light of our strategic priority to 'create shared value', a key takeaway is the Group's determination to extend digital and financial inclusion across Africa, working closely with our many partners. In this pursuit, we enabled approximately 150 million customers to access internet services in 2023, while nearly 73 million used our financial services.
In my engagements across our markets, the message I take with me is MTN's efforts to build partnerships for progress. We work closely with our nation-state hosts to ensure that our role is relevant to economic development, including as a significant and compliant provider of tax revenue – our total tax contribution reached R61.7 billion LA in 2023. Beyond this, the Group's contribution to lives and livelihoods across our markets can be measured in our economic value added. In 2023 this was R159^ billion, up from R149 billion the year before.
Sustaining engagement and good governance
Among the key activities that stood out for me in 2023 were the governance roadshow with investors after annual results, as well as the Capital Markets Day (CMD) held in Johannesburg for the MTN Group. We are also pleased to have pioneered a CMD in Abuja, highlighting MTN Nigeria's strategic position and outlook.
By being out in the markets and meeting with stakeholders, my fellow directors and I are able to get a real feel for the issues on the ground. We also speak to regulators and the government about how we see the direction of policy that is supportive of economic growth and development (see our stakeholder section starting on Social, Ethics and Sustainability Committee Chair’s review).
Underpinning this, good governance is an important basis on which sustainable companies are built; therefore at the core of MTN's business is a commitment to governance that is not only robust, but also anchored in international best practice and applicable laws. We are cognisant of our responsibility to act as a good corporate citizen, uphold our company's values and be accountable, transparent, ethical and inclusive.
In November 2023, an evaluation of the Board was conducted by Hoffmann Reed and FluidRock. It focused on Board effectiveness, dynamics and composition, emphasising the enhancement of MTN's strategic direction. Among the key outcomes (see Governance in support of value creation) of the exercise were recommendations to:
At the end of April 2023, we said farewell to Paul Hanratty, thanking him for his significant contribution to Board deliberations over the years. In January 2023, we were pleased to have Nicky Newton-King join the Board. During the year, we also saw the term of the Independent Advisory Board (IAB)come to an end, although we have no doubt that we will still lean on its former members for their expertise in the years to come as the IAB structure evolves into a more open-architected stakeholder forum.
Our Executive Committee was stable in the year, but in April 2024 we saw the retirement of Group Chief Operating Officer Jens SchuIte-Bockum after seven years of inspirational leadership. We warmly welcome Selorm Adadevoh (previously MTN Ghana CEO), as our new Group Chief Commercial Officer, entrusted with continuing our purpose-driven growth.
We have strengthened our approach to screening director appointments to both the Group and its Opcos through a process conducted under the oversight of the Directors Affairs and Governance Committee, which I chair. This committee has spent much time on succession planning and looking to the future, particularly given the Group's strategic trajectory. The issue of 'overboarding' continues to be a topic that attracts stakeholder attention and in late 2023, the Board approved key principles regarding the number of directorships held by members.
Looking ahead and appreciation
In June 2024, we will mark 30 years of connecting people and creating value. As we continue to navigate the macro-challenges in our trading environment, we reflect with both pride and humility on the progress of the business over the past three decades. This has been powered by the dedication and resilience of MTNers, as well as the support of so many different people and institutions, including customers, governments and regulators, investors, suppliers and civil society. This embodies our ethos of cultivating partnerships for progress in our markets.
In the year ahead, among the key items that will inform Board deliberations are:
Finally, I would like to thank all stakeholders for their support and look forward to engaging with you in 2024. MTN will work to ensure that no one is left behind as we continue with the focused execution of the Ambition 2025 strategy.
Mcebisi Jonas
Group Chairman
Fairland
29 April 2024