MTN Rwanda has reported a solid set of Q4 numbers on an underlying basis (NSRe). Reported service revenue growth decelerated vs. Q3 impacted by the MTR cuts but EBITDA growth accelerated. Mid-term guidance for service revenue growth has been reiterated (“mid-teens service growth”) and the company targets a stable EBITDA margin.
MTN Nigeria reported Q4 results on Friday and held its earnings call yesterday. For our take on the results, including call feedback please click on the link below. We also provide our take on MTN Ghana which reported Q4s a day before MTN Nigeria.
2023 was a relatively tough year for African Telcos, with strong macro headwinds driving currency weakness and cost pressures. With inflation starting to subside some of this pressure is easing, although some African currencies may continue to weaken.
Q3 was a decent quarter for Sub-Saharan African (SSA) operators. Fundamentals remain strong. We have updated forecasts post Q3 results, and our recommendations and target prices remain unchanged, except for Safaricom. AAF remains our preferred play in Africa.
MTN has reported a slower set of Q3 results with both revenue and EBITDA trends decelerated this quarter but overall performance remained decent given the macro economic context and inflection in the SA top line is encouraging.
MTN Rwanda has reported a decent set of Q3 numbers. Service revenue trends decelerated vs. Q2 but EBITDA growth accelerated. The company expects FY23 guidance to remain intact with mid-teens service growth and healthy EBITDA margins.
MTN Uganda has reported a solid set of Q3 numbers with service revenue trends accelerating vs. Q2; service revenue growth is tracking over the MT guidance during these first nine months of 2023. EBITDA trends decelerated but are in line with the MT guidance over 9m23. Also, the company highlighted some improvement in the macro, especially easing inflation, which should be positive for margins in the future.
The environment remained tough for the South African operators in the first half of 2023. Loadshedding was high and impacted revenue (especially voice) and increased opex. Market service revenue was sequentially stable (up 1.6% YoY in H1 23), but EBITDA growth and margins deteriorated as telcos turned to backup batteries and power generators, and additional security solutions.
Q2 was a good quarter for Sub-Saharan African (SSA) operators which continue to benefit from strong fundamentals. Trends accelerated across the board in Nigeria as well as in the other geographies, margins were decent and the capex intensity slowed this quarter.
EM Telcos top line growth slowed somewhat in Q2 again driven by a slower quarter in China. However, other markets stayed strong and simple average revenue growth was 8.5%. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates, as they have been now for 3 years. With the rates cycle seemingly peaking, macro headwinds may also start to improve, and we continue to believe that EM Telcos are still not in our view priced for mid-term GDP+ growth, and rising returns.
Like MTN Nigeria and MTN Ghana last week, MTN Rwanda has reported a slower set of Q1 results, mostly because of the challenging macro environment and an increase in wholesale costs. MT guidance of “low to mid-teens growth in service revenue” is maintained.
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