Amidst loud public outcry against rising data prices particularly on MTN Ghana, the telecoms market leader has reported a significant 55% year-on-year growth in its data revenue for the first half (H1) of 2024, compared to the same period 2023.
Per MTN Ghana’s half year financial report, ending June 30, 2024, data revenue grew by exactly 55% to GHS4.0 billion. This represents more than twice what MTN made from data services a year before.
According to the report, this was supported by a 15.9% year-on-year increase in active data subscribers and a 7.2% year-on-year rise in megabytes consumed per active user per month, which underpinned a 24.2% year-on-year growth in data traffic over the six-month period.
Indeed, recently the Director-General of the National Communications Authority (NCA), Dr. Joe Anokye stated that, currently,MTN commands about 80% of the data market.
As a result, the contribution of data revenue to total service revenue increased from 41.5% in H1 2023 to 49.0% in H1 2024.
Again, over the period in question, MTN also gained a 0.6% market share in general subscriber base, reaching 28.4 million.
SMP perspective
MTN is making all this money from data at a time when Ghanaian are on social and mainstream media crying loudly against high data prices, particularly on MTN. But MTN is not to blame for the status quo.
To put this in perspective, MTN Ghana was declared a significant market power (SMP) in June 2020 because of its shear size and the implications of that for the entire industry. Following the declaration, MTN was order by NCA from 2022, not to have the lowest prices on the market. MTN was therefore compelled to collapse its affordable data packages and increase the prices, amidst huge public protest.
In other words, NCA and by extension the government asked MTN to burden its customers with high data prices and make more money, in the hope that some customers will abandon MTN and join any of the two other networks – Telecel Ghana or AT Ghana- where data is relatively cheaper
As things stand now, per their openly advertised data packages, both Telecel and AT Ghana sell 1GB of data for GHS10, but on MTN, GHS10 only buys up to 718.91MB, less than 1GB.
The reason MTN was ordered to price above the others is to encourage consumers to switch from MTN to other telcos so that the yawning imbalance in the market can be bridged.
But till date, the regulatory intervention intended to help the other telcos grow does not seem to be working, as MTN has even grown data market share further to over 80% during the period, the result of which is the huge growth in data revenue for MTN.
So, obviously, the regulatory intervention designed to curtail MTN has become so ineffective that MTN is reporting significant growth in data customers, data consumption on its network, data market share and bigger revenue.
The only stakeholders bearing the brunt of the regulatory intervention therefore are the consumers who are having to pay more for data on MTN and make MTN richer as reflected in their half year revenue figures.
Meanwhile, the other telcos are also unable to reduce data prices much, else they will collapse, and they are also not investing enough to improve quality of service to attract customers from MTN.
Ghanaians have for several weeks now been all over social media and mainstream media complaining heavily against the high data prices and calling on government and the NCA to do something about it immediately.
Techfocus24 reported that regulator is engaging stakeholders in strategic consultations in an effort to eventually lift the burden off the shoulders of consumers as it has become obvious that burdening consumers to save the two other telcos is simply not serving the purpose unless those telcos invest.
Speaking of investment, MTN Ghana reported that it invested a significant GHS2.8 billion in total capex over the half-year period to maintain network quality, expand coverage and capacity, as well as to enhance its IT systems. This is part of a US$1 billion (GHS16 billion) it has earmarked to invest over a five-year period, ending 2025.
Till date, it is not clear how much the two other telcos have invested in their networks. Telecel promised to invest US$500 million in three years, but now they avoid any conversation about numbers. AT Ghana was also reported to have secured an investor ready to put in some US$150 million, but that is also yet to see the light of day.
More results from MTN
Meanwhile, MTN Ghana generally posted impressive financial results over the period under review, recording a 31.3% growth year-on-year in total revenue to GHS8.1 billion and 36.3% growth year-on-year in profit after tax to GHS2.33 billion in spite of the challenging regulatory and operational environment.
In H1 2024, MTN Ghana delivered a 31.2% increase in service revenue over that of H1 2023. This growth was driven mainly by data, Mobile Money (MoMo) and digital revenues; supported by enhanced 4G connectivity and a 3.9% year-on-year expansion in the subscriber base.
Mobile Money revenue increased by 44.8% YoY to GHS1.9 billion. This was supported by a 16.2% YoY increase in the active user base as we continue to improve our digital financial solutions offering, it added.
Consequently, this led to the growth in advanced services of +73.3% YoY, while cash-out services (+33.0% YoY) and peer-to-peer transactions (+43.1% YoY) also sustained robust growth trajectories.
The overall contribution of MoMo revenue to total service revenue increased from 21.7% to 24.0% YoY.
Voice revenue however decreased by 3.1% YoY to GHS1.7 billion as customers switched to lower-priced plans.
“This was mitigated by an increase in voice usage (+13.7% YoY in minutes of use) as we stimulated higher engagement through our customer value management initiatives. These interventions also helped to reduce customer churn”, the report said.
The contribution of voice to total service revenue also decreased from 29.1% to 21.5% YoY, in favour of faster-growing products and services.
Digital revenue, which has for while now been recording decreases in growth rate, grew strongly by 59.4% year-on-year to GHS101.4 million, primarily driven by video, gaming, and ring-back tones. The enhancement of customer experience and a continued focus on providing locally and internationally relevant digital offerings contributed to this growth.
The number of Ayoba users increased by 14.8% year-on-year to reach 2.9 million. The MyMTN app also saw several improvements and reached a user base of 1.6 million, with over 0.4 million daily users.
The contribution of digital to total service revenue increased from 1.0% to 1.3% year-on-year.
The report said several improvements and new features are planned for the second half of the year to offer an even better digital experience for customers.
Impact of Inflation on OPEX
“Inflation continued to exert an upward pressure on expenses, with total costs up by 31.3% year-on-year to GHS3.6 billion. We mitigated this impact through the continued execution of cost-reduction initiatives under our expense efficiency programme, and this supported a 31.3% YoY expansion in EBITDA to GHS4.6 billion; with the EBITDA margin being maintained at 56.1%.
During the period, depreciation and amortization increased by 37.7% YoY. Finance cost declined by 11.5% YoY on the back of a reduction in loan balances and interest rates”, the report noted.
On the other hand, finance income increased by 49.8% YoY, driven by gains on investments in call and fixed-term deposits. Consequently, net finance costs declined by 44.9% YoY.
The direct tax charge for the period was GHS1.0 billion, representing a 37.3% increase over the same period in 2023. As a result, profit after tax increased by 36.3% YoY to GHS2.3 billion.
Commenting on the impressive financial results for the H1, MTN Ghana CEO, Stephen Blewett, said: “MTN Ghana delivered strong results in the first half of 2024, despite the difficult macroeconomic conditions. This reflects the resilience of the business and our ability to provide essential connectivity solutions to our customers. We have also been able to increase financial inclusion, supporting the further development of the country”.