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

MTN Ghana (Scancom PLC), the nation’s premier telecom company, has reported strong financial and operational outcomes for the three months ending 31 March 2025. This achievement highlights their robustness despite a difficult economic climate characterized by high inflation rates and currency devaluation of the local money known as the cedi.

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 significant 39.6% rise in service revenue year-over-year, totaling GH₵5.3 billion—a figure that surpasses both its mid-term projections and the inflation targets.

Key Revenue Drivers

MTN Ghana’s progression has been driven by strong performance in its main income areas.

• Data revenue climbed by 54.9% year-over-year to reach GH₵2.8 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 among 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% surge in core offerings along with a substantial 72.4% jump in premium services. This has led to MoMo accounting for 24.9% of overall revenue, an uptick from the previous year’s figure of 22.7%.
• Voice Revenue saw a moderate growth of 6.2% reaching GHS951.0 million; however, this accounted for only 17.8% of the overall revenue, indicating an increasing preference among customers towards data consumption instead.
• Digital revenue surged by 65.4% to reach GHS82.1 million, highlighting MTN’s expanding presence in the realm of digital content and services.

Profitability and Efficiency

MTN Ghana’s profit measures also stood out as remarkable:

• 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%, reflecting improved operational efficiency even amid rising costs due to inflation.
• The profit before tax rose by 52.0% to reach GHS2.4 billion, whereas the profit after tax (PAT) climbed by 53.7% to stand at GHS1.7 billion.
• The Earnings Per Share (EPS) increased substantially by 53.7%, rising from GHS0.084 to GHS0.1292, thereby boosting shareholder value.

Investment and Financial Strength

• The Total Capital Expenditure (Capex) for this period amounted to GHS1.2 billion, showing a minor decrease of 3.6% compared to the previous year. Nevertheless, excluding lease costs, Capex increased dramatically by 138.3%, reaching GHS0.8 billion. This significant rise underscores ongoing investments in expanding networks and enhancing IT systems aimed at fostering sustained future 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—a rise of 10.8%. Users of MoMo expanded by 11.5%, totaling 17.4 million, accompanied by a surge in transaction volume of 19.7% and a striking uplift in transaction values by 94.8%.
• In the recent quarter, MTN Ghana reported an operating cash flow of GH₵1.9 billion, concluding the period with GH₵3.8 billion in cash and cash equivalents. The total assets climbed to GH₵45.7 billion, and equity grew to GH₵12.2 billion, indicating a robust financial position.

Supportive Regulatory Environment and Future Strategy

A major regulatory change—the elimination of the e-levy on Mobile Money transactions—is anticipated to boost growth within the mobile money sector by decreasing user expenses for transactions and enhancing financial inclusivity.

Moving forward, MTN Ghana is dedicated to executing its Ambition 2025 plan, highlighting:

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

The firm has adjusted its forecast for medium-term growth in service revenues upwards to fall within the range of 30% to just below 50%. It also expects profit margins to stay around the high-50% mark.

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 activities of the MTN Ghana Foundation continue to focus on various community initiatives encompassing areas such as healthcare, education, and economic enhancement.

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 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, ending the year at approximately 58-59%. This reflects effective cost control strategies despite inflationary pressures and the depreciation 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):
   • With the removal of the e-levy, user activity and transaction volumes are expected to accelerate.
   • We expect the transaction value to increase by more than 80% year-over-year, further establishing MoMo’s position as a key revenue generator.
4. Capital Expenditure (Capex):
   • Further investments in network infrastructure and information technology systems could elevate the capital expenditures outside of leases to above GH₵ 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 would provide greater rewards for shareholders.

Recommendation

EcoCapital Investment Management issues

a “BUY” recommendation


on MTN Ghana shares

,, for the reason stated as follows::

Strong Earnings Momentum:

The financial outcomes for Quarter 1 of 2025 have established a strong base for sustained profitability, even amid economic instability.

Strong Growth in Digital and Fintech Advancement

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

Operational Resilience:

Efficient cost management and strategic network investments suggest an effectively managed business poised 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 EPS increase of more than 50% compared to last year and 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 sales, high profit margins, significant capital expenditures, along with favorable regulatory changes, make it a sturdy and appealing option for investors looking at long-term gains.

Should you require additional details or a comprehensive financial analysis of 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.

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