MTN Sees Robust Growth and Profitability in Q1 2025 Amid Macroeconomic Challenges

MTN Ghana (Scancom PLC), the nation’s premier telecom service provider, has reported notable financial and operational outcomes for the three-month period ending March 31, 2025. These achievements highlight their robustness despite a difficult economic climate characterized by high inflation rates and depreciation of the local currency.

Even with an average inflation rate of 23.0% and a 17.1% yearly decline in the value of the Ghanaian cedi compared to the US dollar, MTN Ghana saw a substantial 39.6% rise in service revenue year-over-year, totaling GH₵5.3 billion—a figure that surpasses both its mid-term projections and inflation targets.

Key Revenue Drivers

MTN Ghana’s progress was driven by strong showings in its main income areas.

• Data revenues climbed by 54.9% year-over-year to reach GHS2.8 billion, accounting for 52.6% of overall service revenue (an increase from 47.4% in the first quarter of 2024). This growth mirrors higher data usage by customers, which increased by 39.7% year-over-year to an average of 13.4 GB per user per month.
• The Mobile Money (MoMo) segment saw revenues increase by 53.1% year-over-year to reach GHS1.3 billion, driven by a 44.8% expansion in core services and a significant 72.4% surge in premium offerings. This brings MoMo’s contribution to overall revenue to 24.9%, an uptick from last year’s figure of 22.7%.
• Voice Revenue saw a slight rise of 6.2% to reach GHS951.0 million; however, this accounted for only 17.8% of the overall revenue. This decline in percentage reflects a wider trend of customers moving towards more data consumption.
• Digital Revenue saw an increase of 65.4%, reaching GHS82.1 million, reflecting MTN’s expanding presence in digital content and services.

Profitability and Efficiency

MTN Ghana’s profit measures were also noteworthy:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 45.0% year-over-year to reach GHS3.1 billion, driven by robust revenue expansion.
• The EBITDA margin increased by 2.2 percentage points to reach 58.1%, showcasing improved operational efficiency even amid rising costs due to inflation.
• The profit before tax escalated by 52.0% to reach GHS2.4 billion, whereas the profit after tax (PAT) saw an increase of 53.7%, totaling GHS1.7 billion.
• Significantly boosting shareholder value, Earnings Per Share (EPS) increased substantially by 53.7%, rising from GHS0.084 to GHS0.1292.

Investment and Financial Strength

• The Total Capital Expenditure (Capex) for this period amounted to GHS1.2 billion, marking a minor year-over-year decrease of 3.6%. Nonetheless, excluding lease costs, Capex surged by 138.3%, reaching GHS0.8 billion. This significant rise underscores ongoing investments in expanding the network and enhancing IT systems to foster long-term development.
• The number of mobile subscribers climbed to 29.2 million, marking a year-over-year increase of 5.2%. Active data users also saw growth, reaching 17.8 million, which represents a rise of 10.8%. Users of MoMo expanded by 11.5%, totaling 17.4 million, accompanied by a surge in transaction volume by 19.7% and a substantial boost in transaction values by 94.8%.
• MTN Ghana generated GHS1.9 billion in operating cash flow, ending the quarter with GHS3.8 billion in cash and cash equivalents. Total assets rose to GHS45.7 billion, while equity increased to GHS12.2 billion, showing a solid balance sheet.

Regulatory Benefits and Future Strategy

A significant regulatory development—the abolition of the e-levy on MoMo transactions—is expected to further catalyze growth in the mobile money ecosystem by reducing user transaction costs and promoting financial inclusion.

Looking ahead, MTN Ghana is focused on implementing its Ambition 2025 strategy, which emphasizes:

• Continuous expansion of income, notably in data and mobile money services
• Operational effectiveness and profit preservation
• Improved customer experience via digital and artificial intelligence technologies
• Key investments in platform and network infrastructure

The company has revised its medium-term service revenue growth guidance upward to the low-to-mid-thirties percentage range, with margins anticipated to remain in the mid-fifties.

Commitment to Ghana

MTN Ghana has remained a significant player in national progress, contributing GHS2.7 billion in direct and indirect taxes for the first quarter of 2025. Additionally, the MTN Ghana Foundation stays engaged in various community initiatives focused on health, education, and economic empowerment.

Outlook and Advice for MTN Ghana Investors – Fiscal Year 2025

Forecast

According to MTN Ghana’s Q1 2025 performance, we anticipate the following major trends for the entire year of 2025:

1. Full-Year Service Revenue Growth:
   • Anticipated to increase by 34%–38%, exceeding earlier medium-term forecasts, driven by ongoing growth in data and mobile money (MoMo) services.
   • It is anticipated that data revenue will surpass 55% of the total service revenue by the fourth quarter of 2025.
2. EBITDA and Profit Margins:
   • The EBITDA margin is expected to stay steady with slight improvements, finishing the year at approximately 58-59%. This reflects effective cost control strategies despite inflation and the devaluation of the cedi.
   • The full-year profit after tax (PAT) is expected to increase by 45% to 55%, possibly hitting GH₵ 6.5–7 billion should the present trend persist.
3. Mobile Money (MoMo):
   • Following the elimination of the e-levy, an increase in user engagement and higher transaction volumes is anticipated.
   • We expect the transaction value to increase by more than 80% year-over-year, which will further establish MoMo as a key income generator.
4. Capital Expenditure (Capex):
   • Further investments in network infrastructure and information technology systems could elevate the capital expenditures beyond GHC 2.5 billion for the year, consistent with MTN’s Ambition 2025 strategic plan.
5. Dividend Outlook:
   • With better cash flow and profits, dividends per share (DPS) could be increased, possibly rising at a similar rate as earnings per share (~53% year-over-year growth in Q1). This adjustment would provide greater rewards for shareholders.

Recommendation

EcoCapital Investment Management issues

a “BUY” recommendation


on MTN Ghana shares

, for the reason stated below:

Strong Earnings Momentum:

The financial outcomes for Quarter 1 of 2025 have established a strong base for sustained profitability, even amidst fluctuating economic conditions.

Robust Digital & Fintech Expansion:

Rapid high-double digit expansion in both data and mobile money sectors has established MTN as a frontrunner in digital transformation within Ghana.

Operational Resilience:

Robust cost management and strategic infrastructure spending point to an efficiently managed business equipped to handle inflationary pressures and foreign exchange fluctuations.

Attractive Returns:

MTN Ghana stands out as an appealing choice for both income seekers and growth investors, thanks to its year-over-year EPS increase exceeding 50%, along with anticipated improvements in dividends.

Macroeconomic Tailwinds:

Eliminating the e-levy and potentially loosening fiscal policies might additionally boost growth within the telecommunications industry and increase consumer involvement.

Target Price Estimate (12-month):

Given the earnings trajectory and historical valuation multiples, EcoCapital places a target price range of GHS 3.90 – GHS 4.50 per share by Q1 2026.

Conclusion

MTN Ghana’s financial performance in the first quarter of 2025 demonstrates a company that is robust financially, operates efficiently, and remains well-positioned with clear strategies for upcoming expansion.

Even with challenging economic conditions, the firm’s robust increase in revenues, profitable operations, significant capital expenditures, and favorable regulatory changes make it a sturdy and appealing option for investors looking at long-term gains.

To obtain additional details or comprehensive financial analysis regarding MTN Ghana or other publicly traded companies, kindly reach out to the professionals at EcoCapital Investment Management for their expertise in providing financial consulting services.

Provided by Syndigate Media Inc. (
Syndigate.info
).