Shares of MTN Group Ltd. experienced a significant drop following a decline in revenue from its South African branch, leading the continent’s largest mobile phone operator to make management changes.
The company’s stock plummeted by as much as 10% on the Johannesburg Stock Exchange — marking the steepest fall since March 2023 — though it did recover some losses later in the day.
Investors expressed unease over the US Department of Justice’s probe into the company’s operations in Iran and its previous subsidiary in Afghanistan.
In response to the challenges, MTN appointed Ferdi Moolman as the new CEO of its South Africa division, succeeding Charles Molapisi, while Yolanda Cuba was named the deputy CEO. Additionally, Chief Financial Officer Tsholofelo Molefe will see her role expanded to include mergers and acquisitions.
MTN has been working to stimulate growth in South Africa. Although it previously engaged in discussions to acquire Telkom SA SOC Ltd., it ultimately decided to back out three years ago.
In contrast, the company’s Nigerian operations saw a 37.5% increase in revenue, reaching US$1.6 billion in the first half of the year, making the Nigerian sector larger than its South African counterpart.
Group CEO Ralph Mupita has set a goal to revitalise the struggling South African business within three years, which has reported a 3.7% sales decline.
Bloomberg Intelligence analyst John Davies remarked, “The latest news is largely negative.” Investors are concerned about the reduced guidance for South Africa, primarily due to the challenging prepaid market and concerning details regarding US investigations into past operations in Iran and Afghanistan.
MTN holds a 49% minority stake in Irancell and divested its Afghanistan unit in 2022. Mupita indicated that many issues faced are legacies from the past, stating, “We have to spend time to defend ourselves.”
Mupita further observed that the number of operators in South Africa affects the profitability in the market.
On the competitive front, MTN’s rival Vodacom Group Ltd. recently gained regulatory approval to acquire fibre assets from Remgro Ltd.
For the first half of the year, MTN reported a net income of 9.75 billion rand, a notable recovery from a loss of 7.39 billion rand during the same period last year, which was attributed to currency issues in Nigeria and Ghana.
The company also announced a streamlined strategy focused on three key areas: connectivity, fintech, and digital infrastructure. Mupita confirmed, “We have been working on a strategy to decouple some of the digital infrastructure assets,” adding that the process of carve-outs will continue as part of their strategic objectives.
