Roy Mutooni: Good day to everyone, and thank you for joining us once again to discuss the MTN Group trading update for the nine months ended September 2026. My name is Roy Mutooni. I look after investor relations at the MTN Group. On the call with me this afternoon, I have Ralph Mupita, who is our Group President and CEO, Tsholofelo Molefe, who is our Group CFO, and Ferdi Moolman, who is our MTN SA CEO. Our trading update was published this morning on the JSE, and it is posted on our website. If you have not had a chance to look at it yet, you will find it on our investor relations page.
Roy Mutooni: I trust you have also seen the Q3 releases from our listed operating companies, who published results over the last few weeks. In terms of the agenda for today, the running order of the call will be as usual.
Roy Mutooni: Ralph will get us underway with an overview of the operational performance. He will be followed by Tsholofelo with an overview of our financial highlights, and then Ralph will come back to wrap up with a few focus areas as well as outlook comments. We will then move into Q&A, and I encourage you to send your questions in advance onto the webcast platform, and I will read those out towards the end of the call. Finally, a reminder that this call is scheduled for about an hour, at which point we will close the call. With that, let me hand over to Ralph.
Ralph Mupita: Thank you, Roy, and good afternoon to everybody. Thanks for joining us from your various locations. Before we begin, I would just like to ask you to note the disclaimer on this slide two, and particularly as it relates to forward-looking statements. Our headline is clear. Growth reaccelerated through the Q3, margins expanded, and cash generation was strong. Let me unpack this in the six key messages for the nine months to 30 September 2026. First, the group delivered a strong performance. Service revenue grew by 17.2% and by 16.6% in the Q3. Importantly, growth accelerated every month from May to exit September at 18.1% service revenue growth. EBITDA grew faster than revenue, up 22.9%, lifting the group EBITDA margin by 2.8 percentage points to 37.9%, despite the high energy costs that we had across our markets.
Ralph Mupita: Second, EBITDA growth accelerated in the Q3 in several of our key markets compared with the Q2 growth rates. Q3 EBITDA growth stepped up in Nigeria to 32.8%, in Ghana to 43.1%, in South Africa to 7%, Rwanda to 26.9%, and Zambia to 55.2%. Third is fintech improved through the period. Reported fintech revenue grew by 12.7%, held back by the suspension of Airtime Advance in Nigeria in Q2 and the beginning of Q3. Excluding Airtime Advance, MoMo revenue grew by 18.5% and accelerated to 19.9% in the Q3. Our advanced services grew by 32.4%, and fintech transaction value rose by 36.9% to $512.5 billion. Fourth, cash generation and the balance sheet are strong, which Tsholo will cover. We generated free cash flow of ZAR 22.4 billion.
Ralph Mupita: Our operations upstream ZAR 21.4 billion to the holding company, up 80% on a year ago, and the net debt-to-EBITDA was 0.2x. Fifth, we have commenced our share buyback program, and it is progressing. We executed ZAR 2 billion of the three-year, ZAR 6 billion program that we announced at the H1. Sixth, the IHS transaction remains on track. We have received IHS shareholder approvals, Nigerian regulatory, and COMESA approvals. The South African Competition Tribunal, ECOWAS, and CEMAC approvals are the ones outstanding, and we still expect completion before the end of 2026. In terms of commercial momentum, we saw it sustained across our markets. Subscribers increased by 7.2% to 322.9 million. Active data subscribers grew by 9.6% to just under 182 million, and we saw data traffic rising by 27.3%, with quarterly traffic rising from 6,800 PB in Q1 to more than 8,400 PB in Q3.
Ralph Mupita: In fintech, MoMo monthly active users increased by 9.3% to 70.3 million, with the slight dip in the Q3 reflecting the platform migration that is ongoing in Nigeria. Transaction volumes rose by 20.1% to $20.3 billion. As I mentioned earlier on, the transaction value grew by 36.9%, reflecting greater usage and the continued maturing of our ecosystem. This growth was broad-based across the portfolio. Of the 21.7 million subscribers we added over the year, Nigeria contributed 9.3 million, and the CFAS region, just over six million, with Ghana adding 3.9 million. Francophone Africa added 2.4 million, and our joint ventures added 1.2 million. The South African base was 1.1 million lower, reflecting the deliberate reset of our prepaid base. We added 15.9 million active data users, led by Nigeria with 6.1 million, and six million MoMo active users, with CFIA the largest contributor at 2.7 million.
Ralph Mupita: Beyond our three largest markets, the broader portfolio made an improving contribution. MTN Côte d'Ivoire sustained its turnaround, with service revenue up 16.1%. Data revenue was up 45.4%, and EBITDA was up 27.5%. MTN Uganda had a tougher quarter. It added 2.9 million customers, and fintech growth accelerated to 13.3% in the Q3. Unauthorized public Wi-Fi resellers drew usage away from mobile data. We are working with the authorities and the rest of the industry to address this and restore data growth, and MTN Uganda expects an EBITDA margin of around 50%, for FY 2026. Let me now turn to our key operations, starting with South Africa. Service revenue was flat in the Q3 and grew by 1% for the nine months. The consumer business improved on the Q2. Prepaid is turning.
Ralph Mupita: The decline in prepaid revenue narrowed from 3.2% in Q2 to 2.4% in Q3. Prepaid data revenue growth accelerated from 5% to 6.3%, and the Q3 recharges were 3.1% higher than in Q2. Prepaid monthly data usage rose by 28.9% to 5.2 gigabytes. Consumer postpaid grew by 5% in Q3, up from 4.3% in the Q2, and data now accounts for 50.5% of service revenue in South Africa. Enterprise and wholesale slowed in the quarter. Enterprise revenue grew by 1.8% in Q3, against 4.4% for the nine months, on lower bulk SMS and mobile advertising revenue, and also grew by 3.9% against 10.4% on lower traffic from major wholesale customers.
Ralph Mupita: We also continue to see pressure in voice, which declined by 10.5%, with interconnect revenue down 20.4% after the cap in mobile termination rates, and in digital and fintech, which declined by 10.2% and 15.3% respectively, the latter largely because of the XtraTime reset. We have deliberately reset the prepaid base and XtraTime, our airtime advance service prioritizing the quality of the base over the short-term volume. Prepaid subscribers fell by 829,000 in the quarter to 27.4 million. But the prepaid ARPU rose by 6% quarter on quarter to just under ZAR 65. Fewer, but more valuable customers. Prepaid ARPU was also 2.8% higher year on year, and consumer postpaid subscribers grew by 6.1% to 4.8 million. Turning to profitability, the Q3 was MTN South Africa's strongest earning quarter for the year. EBITDA grew by 7%.
Ralph Mupita: EBITDA margin rose to 38.1%, up 3.6 percentage points year on year, and 2.2 points on the Q2, as the structural cost intervention started to take effect. Over the nine months, network and IT costs were 5% lower, marketing spend was reduced, and doubtful debts fell by 16.2%. This is against headwinds from XtraTime reset, softer service revenue, commissions, and bulk SMS costs, as well as the share scheme charge. Excluding immaterial tower disposal losses, the margin has improved every quarter this year, from 32.6% in Q1, 35.9% in Q2, and 38.1% in Q3. We would not annualize the Q3, though. About 0.8 percentage points of the 3.6 percentage points came from lower device revenues, which were down 21.5%. Seasonally stronger device sales would dilute the Q4 margin.
Ralph Mupita: For the full year, we continue to expect an EBITDA margin within our 35% to 37% range. Our performance in South Africa is not at the level of our ambitions, but we believe the business is likely bottoming. Our cost base is leaner, the customer base healthier, and our margins stronger. The recovery will be recharge-led, as recharges excluding repayments continue to grow as the reset normalizes. We expect this to show increasingly in reported service revenue. In the Q4, we will complete the XtraTime reset and simplifying the portfolio. For the full year, we continue to expect service revenue growth below our low to mid-single-digit medium-term guidance. On Cell C, MTN SA and Cell C have engaged extensively on the terms of their longstanding, which has not reached agreement on certain terms as at this point in time.
Ralph Mupita: These will be addressed through the mechanism provided for in the party's agreement, while engagement on the terms of relationships going forward continues. We are also engaging ICASA on the amended End-User and Subscriber Service Charter Regulations, which are due to take effect in January 2027. Moving on to Nigeria, MTN Nigeria published its results on 30 October. Service revenue grew by 23.5% in the nine months and by 19.7% in the Q3, accelerating each month to 21.6% in September, and the EBITDA margin was 56.9%, both are within guidance. The operating environment was more supportive, the naira was stable, FX liquidity improved, and average inflation moderated to 15.4%, although energy and diesel costs remained elevated. Part of the Q3 improvement reflects easier comparative and the resumption of Airtime Advance in July, but the momentum is more than base effects.
Ralph Mupita: With the first quarter tariff increase now largely in the base, growth rose every month through the quarter, driven by underlying demand, usage, and execution. Subscribers have increased by 10.9% to just under 95 million, with 3.2 million mobile net additions in Q3, up from 2.7 in Q2. Active data users rose by 12% to 57 million, and data traffic grew by 30.1%. In Q3, data revenue grew by 31.4%, voice by 9.3%. For the nine months, data revenue grew by 35.6%, digital by 24.1%, and voice by 10.9%. We continue to roll out the network with CapEx of NGN 10.2 billion, excluding leases, and home broadband supported by our fiber to the home leadership. This is an increasingly important growth driver for our business in Nigeria. Fintech revenue in Nigeria declined by 26.6% due to the suspension of XtraTime in Q2.
Ralph Mupita: The service resumed in July under a new multi-partner model. Q3 XtraTime revenue was 77.9% higher than Q2, and MTN Nigeria expects it to return to pre-suspension levels before the end of the year. MTN Ghana sustained a strong performance. Service revenue grew by 33.5% in the nine months, up from 32.3% at the H1, supported by moderate inflation of 5.2%, and a more stable cedi in Q3, which improved predictability and eased cost pressures. Growth was broad-based. Data revenue grew by 44.7%. Data now accounts for 58.1% of total service revenue, up from 53.6% a year ago. Digital revenue grew by 97.7%, mobile money by 25.3%, and voice by 7.2%, while active data users increased by 16% to 22 million. EBITDA grew by 14.7%, and the margin expanded by 3.2 percentage points to 61.6%.
Ralph Mupita: We accelerated CapEx to GHS 3.8 billion, excluding leases, more than double the number of homes passed, and completed the structural separation of the fintech business. Turning to fintech revenue, as I mentioned, grew by 12.7%, mainly held back by the suspension of XtraTime in Nigeria in Q2. Together with lower interest on float balances in Ghana and the election-related disruptions in Uganda earlier in the year, this weighed on profitability, with the fintech EBITDA margin at 41.7% compared to 44.3% last year. Excluding XtraTime, MoMo revenue grew by 18.5%, basic revenues grew by 11.5%, whilst advanced services grew by 32.4%, and now contribute 37.4% of MoMo revenue, excluding XtraTime, and this is up 3.9 percentage points. The ecosystem continues to deepen. Active agents are up 7.5% to 1.4 million. Active merchants are up 19.4% to 2.5 million.
Ralph Mupita: Merchant payment values grew by 16.5% to $19.6 billion. Loan values facilitated across marketplace lending and MoMo Advance rose by 80.1% to $4.2 billion, driven by Ghana, Uganda, and Cameroon. Remittance values grew by 15.7% to $5.5 billion, helped by proactive management of informal routes and partner liquidity, and direct management of international money transfer traffic. Bringing this all together, we have made good progress against our medium-term guidance. Group service revenue at 17.2% is in line with our target of at least high teens. In Nigeria, 23.3% is within our guidance of at least low 20s. South Africa at 1% and fintech at 12.7% are below our ranges for the reasons I have outlined. Group leverage at 0.2x as well, within our target of 1x or lower, and return on capital employed of 32.5% is within our high 20s to low 30s range.
Ralph Mupita: Let me hand over to Tsholofelo to take us through the financial review.
Tsholofelo Molefe: Thank you, Ralph, and good day, everyone. I will take you through the financial results for the nine months before handing over back to Ralph for the outlook. As usual, I will refer to constant currency growth rates unless otherwise stated. These remove the impact of currency movements, and for Iran, Sudan, and South Sudan, the effect of hyperinflation accounting. If I can start with the key financial messages that we would like to leave you with. Firstly, strong underlying growth, operating leverage, and cash generation continue to support our capital allocation. As said, we have seen service revenue growth of 17.2% to ZAR 176 billion, and EBITDA growing by 22.9%, with a margin up 2.8 percentage points to 47.9%. On a reported basis, service revenue grew by 9.9% and EBITDA by 17.7%.
Tsholofelo Molefe: The difference here reflects a rand that was on average about 10% stronger against the US dollar, which lowered the rand value of results from our operations outside South Africa. On earnings quality, EBITDA growth outpaced service revenue growth, and our expense efficiency program absorbed higher energy costs. The exception was fintech, where the EBITDA margin was 41.7% compared to 44.3% same period last year, largely because of the Airtime Advance suspension in Nigeria. On capital allocation, we saw free cash flow reaching ZAR 22.4 billion for the nine months, and we upstreamed ZAR 21.4 billion, which was up 80% compared to ZAR 11.9 billion a year ago. This enabled us to settle our Eurobond, which matured in October of $500 million, and we also were able to repurchase approximately ZAR 2 billion in shares under the buyback program, while maintaining our targeted debt levels.
Tsholofelo Molefe: We saw group service revenue increasing, as I indicated, and this growth was broad-based and well ahead of our blended inflation of 9.5%. Data remains our largest growth engine, with data growing 28.2% to almost ZAR 89 billion, and now it accounts for 50% of our group service revenue. Fintech revenue grew 12.7% to ZAR 22.6 billion, and as Ralph mentioned, excluding Airtime Advance, MoMo revenue grew by 18.5%. The group EBITDA margin, as I indicated, expanded from 45.1% to 47.9%, really reflecting operating leverage and the benefits of our EEP program. If I look into the quarterly trends, growth accelerated in Q3 after the dip that we saw in Q2. Service revenue growth was 21.1% in Q1, 14% in Q2, and 16.6% in Q3. The first quarter was boosted by price increases in Nigeria, as we know.
Tsholofelo Molefe: Q2 dipped as those increases moved into the base. Airtime Advance in Nigeria, as we said, was suspended. In Q3, we saw growth recovery, which was also supported by Benin, Congo-Brazzaville, as well as Sudan, and the restoration of fintech services in Nigeria, and the customer value management initiatives in Ghana. Data revenue followed a similar pattern, growing by 35.4% in the first quarter, then 23.8% in Q2, before improving to 26.4% in Q3. Fintech revenue was at 20% in the first quarter. It dipped to 7% in the second quarter and improved in third quarter, reaching 11.6% increase. Importantly, the EBITDA margin improved every quarter from 47.6% in Q1, reaching 47.7% in the second quarter, and now at 48.2% in the quarter under review.
Tsholofelo Molefe: Turning now to our three largest operations, we saw margins improving in Nigeria, Ghana, and in South Africa, in South Africa, excluding the share scheme provision, despite the softer service revenue growth against a higher base. In South Africa specifically, we saw service revenue growth of 1% compared to 2% in the prior period. The reported EBITDA margin was 35.5%, which was down 0.4 percentage points. Excluding the MTN SA employee share scheme, EBITDA declined by 0.7%, with the margin reaching 37.8%. In MTN Nigeria, service revenue grew 23.5% against a high base of 57.1% last year, which benefited from the tariff adjustments. The EBITDA margin expanded by 5.4 percentage points from 51.5% to 56.9%, which is within the guidance. In MTN Ghana, service revenue grew 33.5% against 35.9% in the prior period.
Tsholofelo Molefe: EBITDA increased by 40.6%, and the margin expanded by 3.2 percentage points to 61.6%, driven largely by strong revenue growth, disciplined cost management, and operating leverage. The quarterly view shows the direction of travel as well. You will see in South Africa, as Ralph indicated, service revenue was flat in Q3, but the margin improved every quarter, reaching 38.1% in the third quarter. In Nigeria, service revenue growth moved from 41.7% in the first quarter, which included the tariff adjustment, as I indicated, to 13.2% in Q2, before recovering to almost 20% in the third quarter, 19.7% to be exact. While the margin improved each quarter from 55% to 56.5% in the second quarter and reaching 58.7% in Q3. This was in Nigeria.
Tsholofelo Molefe: With Ghana, service revenue growth was 35.7% in the first quarter, 9.2% in Q2, and 35.7% in the third quarter, with the margins between 61.2% and 62.3% throughout that period. Now, if you move on to the rest of the portfolio, our SEA+ region grew service revenue by 19.7% to ZAR 25.1 billion, ahead of the region's blended inflation of 18.2%. The EBITDA margin was 44.1%, a 1.7 percentage points lower than a year ago, as MTN South Sudan, as well as MTN Sudan, remained exposed to macroeconomic currency as well as operational pressures. MTN Rwanda grew service revenue by 20% and the EBITDA by 29.1%, while MTN Uganda grew service revenue by 8.5% with an EBITDA margin of 51.1%, down 2.7 percentage points as unauthorized public Wi-Fi resellers drew usage away from the mobile data, as we indicated earlier.
Tsholofelo Molefe: On the Francophone side, we continue to see its improving trajectory with service revenue up 9.4% to ZAR 26.1 billion, comfortably ahead of the blended inflation of 2.4%. The EBITDA margin expanded by 0.6 percentage points to 36.5%. MTN Côte d'Ivoire sustained its turnaround with service revenue up 15.1% and the EBITDA margin up 3.4 percentage points to now 39.6%, leading the region's margin expansion. MTN Cameroon grew service revenue by 11.4%, with data revenue up 24.4%. If we move on to the balance sheet, we invested ZAR 20.8 billion in CapEx, excluding leases, compared to ZAR 27.9 billion last year, with CapEx intensity of 15.9% against 16.8% last year. This included accelerated investments that we made in Nigeria, in Côte d'Ivoire, in Uganda, as well as in Ghana.
Tsholofelo Molefe: For the full year, we do expect the CapEx to remain within our envelope of between $2 billion and $2.5 billion for the year. Cash upstreaming to the group, as I said, up 80% to ZAR 21.4 billion from ZAR 11.9 billion a year ago. The balance sheet remains strong. Group net debt to EBITDA at 0.2 times, well within our targeted range, and liquidity headroom of ZAR 42.8 billion. After the period end, we settled the Eurobond, as I indicated, which matured sometime mid-October. With that, I will hand over back to Ralph to discuss the outlook and priorities.
Ralph Mupita: Thanks very much, Tsholofelo. In wrapping up, in concluding, our focus areas are clear, which is to sustain commercial momentum across the entire portfolio, to deliver the MTN SA prepaid recovery, to execute on our fintech commercial and strategic priorities, and the Nigeria Airtime Advance rebuild. Also to maintain our capital and cost disciplines and provide sufficient liquidity, particularly as we are looking to complete the IHS acquisition. We are encouraged by our year-to-date performance. The structural demands for data and fintech services continue to underpin the MTN investment case and our medium-term growth. The group remains well-positioned to deliver on its medium-term guidance, group service revenue of at least high teens, return on capital employed in the high 20s to low 30s, and the group leverage of 1x or lower.
Ralph Mupita: In short, growth re-accelerated through Q3, margins expanded, cash generation was strong, and MTN SA is moving in the right direction. With that, thanks very much, and Roy, back to you for the Q&A.
Roy Mutooni: Ralph and Tsholofelo, thank you very much for that overview. We can jump straight into the Q&A. I would like to start with a few questions for South Africa, as Craig is here with us in the room. If I just said in summary, what makes you comfortable that this MTN SA service revenue will re-accelerate? Can you be more specific on the drivers for the improvement in MTN SA EBITDA margin?
Ferdi Moolman: Yeah, sure. Let me address the question by talking about quality versus quantity of subscribers, and I think we have mentioned this quite a few times. One of the things you will see we reported is an increase in ARPU, but what this also does, by the way, it also assists with the drop in cost. When we look at quality versus quantity, this is not just on the prepaid base, but also on the postpaid base, as the quality of the subscriber improves. Your bad debt ratio, for example, also increased, so you will see an increase in the cost. It is a purposeful reset also of the base, so there is a lot of focus on getting the KYC up to the standards.
Ferdi Moolman: I think, I am sure you are aware that ICASA actually released draft regulations, they call them numbering regulations, but if you read them, it is more or less around KYC and what needs to happen in the market with KYC. We are in support of this direction. There are some challenges with the regulation, but we are working with ICASA to come up with a regulation that we believe is practical and can be employed and can be done in the market. Other growth areas also, perhaps, as you are aware, is resetting XtraTime. We basically cleaned up the base as best as we can, and we are now starting to push XtraTime again, so that will start contributing to the prepaid base also. On the enterprise side, you would see a flat Q2 to Q3 on enterprise.
Ferdi Moolman: Enterprise does have some seasonality in it, so there is reference that we made to mobile advertising. Hence, there is some seasonality in mobile advertising. As an example, you have Black Friday coming up in November, you have the end-of-year seasonality coming at the end of the year, so you will see an increase in mobile advertising. We also purposely looked at implementing a Treating Customers Fairly on the mobile advertising as well, aligned with some of the regulations that have come into play. On the wholesale base, the wholesale is not just impacted by MVNOs or by the Cell C relationship, but there was also a mobile termination rates reset that took place at the end of June of this year, in the beginning of July, where the rate was dropped by 2 cents per minute.
Ferdi Moolman: Also, on the cost base, I think there was a question around the cost as well. I did address some of the impacting costing on focusing on quality of subscribers, where I spoke about the improvement of the debt base and postpaid specifically. Then, of course, as we start pushing less and less SIMs, as we stop driving for quantity as opposed to quality, you push less SIMs in the market, and that cost also then reduces over time. The other cost savings come from more sustainable on the network side, on the IT side, et cetera. That's basically the response.
Roy Mutooni: Thanks, Ferdi. This one's for you, Ralph. Can you give us any update on the IHS transaction and the outstanding approvals? How come there have not been any public hearings from the Competition Commission or Competition Tribunal?
Ralph Mupita: Yeah, I mean, the dates that I can share is we are at the Tribunal on 17 November. We were originally meant to have been on last Friday, 6 November. Tribunal asked us to move it to 17 November. So, we'll be there on 17 November. Obviously, if there are any intervening parties that we just talked to South Africa that have come through initially at the ComCom ahead of going to the Tribunal. We've put forward a set of the so-called FRAND conditions, fair, reasonable, and non-discriminatory terms that I think one would imagine in an open access telco model, parties would look to see being in place. I guess, there'd be limited intervention up to now, because we've met those conditions which third parties would be keen to ensure that there's no discriminatory behavior in favor of MTN in this case.
Ralph Mupita: So, as we said, the approvals that are outstanding are substantially ECOWAS, and we're working through that. There's also the CEMAC as well as the Competition Tribunal here in South Africa, which will be heard on 17 November.
Roy Mutooni: Ralph, this one's for you, Tsholofelo. Upstreaming nearly doubles to ZAR 21.4 billion. How much of that is linked to working capital movements or the timing of OPCO dividends? Would you be able to give us a sustainable run rate and the order of use, buybacks, dividends, IHS, or deleveraging?
Tsholofelo Molefe: Yeah, I mean, firstly, just to clarify, our upstreaming is based on the dividends that declared by the operating companies. Obviously, as the major shareholder, we get that cash upstreaming. I think to address the point, I think probably you want to ask about free cash flow. The free cash flow was strong during the period, and you've seen it also in H1. It's really primarily due to strong underlying performance. The working capital levels have remained similar to H1 levels, but we expect that to improve in the last quarter as per normal due to seasonality.
Roy Mutooni: Thanks, Tsholofelo. Maybe Ralph, you can answer this one. Excluding SA, Nigeria, Ghana, and Uganda from the group, maybe speak a little bit about the margins for the rest of the markets and whether any of the markets stand out from a medium-term perspective.
Ralph Mupita: Yeah, I mean, we're pretty excited about Côte d'Ivoire. I mean, Côte d'Ivoire as a country is a large economy. I think on a GDP basis, it's similar, and depending on cocoa sales or gold sales in Nigeria, sorry, in Ghana, it's similar size to Ghana on a GDP basis. So, we think that this is a market where we should anticipate much higher contribution to the business. So, what we're seeing now in the growth, particularly of the connectivity business, we still have some pressures in the fintech business, but the connectivity business is growing very strongly. We're putting CapEx to work there, and we're seeing the growth coming through. So, pretty excited about that market in terms of an increased contribution and therefore adding to earnings and cash flow over time. The other one would be Cameroon.
Ralph Mupita: Cameroon is a business in a good market position, and again, can do a bit of heavy lifting. Benin has been a market where we have challenged and battled with asymmetric regulatory conditions. These are being resolved now, and we thank the authorities for leveling the playing field for us there. Many moons ago, Benin was one of the highest cash repatriators to the group when you looked at management fees and dividends. So, if we can restore that business, I think going into next year, that should also be exciting. So, those will be three businesses that I would highlight as part of the portfolio that can, over time, continue to contribute not just to earnings, but to the overall cash position. These are businesses where we think, over time, the margins can improve.
Roy Mutooni: Thanks, Ralph. To Ferdi, can you provide some color on the competitive environment in South Africa? Also, can you help us understand the issues with the Cell C contract and how important it is in the mix for MTN Group?
Ferdi Moolman: Let me perhaps start with Cell C and just make two comments. Obviously, we are sticking to the statement we made in terms of where we are with the contract itself. But the relationship for us with Cell C is very important. We value the longstanding partnership, and we will work towards a position where both parties get commercially viable basis for us to go forward, to get to a position where we have a commercially viable basis going forward. I think the second point I just wanted to make is there must be clear understanding that the customer service and the customer will not be impacted at all as the process continues. I think generally that, then in terms of the competitive environment, still very competitive in the prepaid environment.
Ferdi Moolman: We will focus on the direction we are going in, which is principally focusing on quality subscribers as opposed to just bringing volume in. We believe this is a sustainable way going forward that will give us sustainable revenue growth, clear cash flow, and also it will not inflate our expenses. In terms of the other channels, we still believe there is a lot of opportunity in the enterprise space, especially in ICT. We also believe there is a lot of opportunities in the home base, where we also believe we can grow substantially on the home base as well. That is it.
Roy Mutooni: Thanks, Ferdi. This one's for you, Ralph. Given the low inflation in places like Ghana, and even when you look at your blended inflation has come down, what impact do you think that will have on your medium-term guidance?
Ralph Mupita: Well, it's a great question, and I think Stephen and the team would have probably addressed this on their own call. Inflation is single-digit low in Ghana at the moment. Our own views and reading through forecasts, et cetera, is that over the medium term, that's potentially likely to be kind of early mid-teens. I mean, our guidance is always kind of medium-term guidance is 3 to 5 years. What you've seen in Ghana is that the inflation actually went to hyperinflation, so close to the 40s, and quite materially came back to the low single digits. The way we look at it is that we will assess at the beginning of the year, kind of the 3-to-5-year outlook when we normally do our three-year planning processes, which we'll complete in this month, to have a look at what that would look like.
Ralph Mupita: I think you can anticipate that if inflation remains stubbornly much lower, which obviously is a good thing, that the service revenue guidance, we may look to adjust that. But we want to have a look at it with a three to five year lens on what that would be. I think when you look at the margin, we've said before that at 61+, that's very good margins, but we wouldn't pencil that in for the medium term. We think that the margin, even if inflation comes down, the margin that we currently have remains good guidance. Looking at Nigeria, I think our guidance remains pretty, we're comfortable with that. Inflation is 15 odd. We want to earn service revenue growth, a couple of percentage points above inflation.
Ralph Mupita: Nigeria, for us, remains, I mean, the only outlier is we had very sustained high energy costs for a period of time that might eat away at the margin, and we've given the margin sensitivity before. I won't touch on South Africa. I think that one's pretty straightforward. I think if we do look at a change in guidance, as I said, we would want to let the full year come and pass, as we start also looking at the year ahead. It's more likely on the service revenue rather than the margin. The margin, we think, guidance there will keep going up or remain pretty much in place.
Roy Mutooni: Thanks, Ralph. This one is for you, Tsholofelo. How confident are you of your CMD CapEx envelope guidance of USD 2 billion to USD 2.5 billion for annual CapEx to be spent between 2026 to 2030?
Tsholofelo Molefe: Yeah, I mean, we maintain that guidance of USD 2 billion to USD 2.5 billion. Of course, we will assess on an annual basis, as we have always said that, strategically, the areas that we will support, such as connecting the home, continue to win in data across the market. I think those are the key areas, and we will look to see once we have completed the IHS transaction, what maintenance requirements are available. So, we will continue to update as and when, but we retain the guidance at this point.
Roy Mutooni: Thanks, Tsholofelo. Ralph, are you still considering potential East African expansion opportunities? What markets outside of your current footprint look attractive for greenfield or brownfield expansion?
Ralph Mupita: Yeah, you make a statement in a newspaper interview about long, long term, where might you be. That was a long, long-term statement, not even a medium-term statement. I think we have our hands pretty full at the moment with the kind of organic stuff, as well as IHS. Yeah, I mean, it is a statement I made about the medium to long term, five years plus out. But I would not say there is anything that is out there in East Africa that would be calling on any of our capital at the moment. That is all I can say for now.
Roy Mutooni: Thanks, Ralph. Tsholofelo, this one is for you. How are you thinking about capital market activity after paying down the 2026 international bond, and would you be able to update us on your bond issuance plans following the redemption of the 2026 Eurobond?
Tsholofelo Molefe: Yeah, I mean, I think on your first question, as we have indicated, we have a capital allocation framework that has served us well, and we continue. We updated you with the revised framework at the CMD, so we still maintain that, number one, investing in areas of growth across our platforms. Secondly, continue to maintain a healthy balance sheet. And number three is shareholder remuneration. And fourth, we will continue to look at M&A selectively, to the extent that we are comfortable that there is return accretion and based on a robust risk assessment criteria. I think on your second question, as we have indicated, we will obviously assess when is the right time to come to market, and we will update you accordingly.
Roy Mutooni: Thanks, Tsholofelo. Ferdi, this is the last question. How should we look at SA margins from here? What are the key drivers that could push margins towards the top or bottom of the guidance range? Would you prioritize margin preservation over growth and market share gains?
Ferdi Moolman: Yeah, so, look, there is still a lot of work that we are doing, especially on the program that we call Fit to Win, which is our cost initiative. A lot of the initiatives go into 2027. As we said before, this is not just a matter of cutting costs. This is a matter of getting sustainable efficiencies in the network. So, we are still going to And a lot of the margin growth that you saw this year relates to that. I reflected on this earlier when I spoke about the bad debt as an example of this. There is still work that we are busy doing, especially on the bad debt side. We are busy working with the small and medium enterprises now at this particular point in time. So, we will still see some large cost initiatives coming through, also specifically on the network side.
Ferdi Moolman: As you are aware, we are also busy updating our BSS stack. As the BSS stack becomes more operational, that will also become far more cost-efficient, and all of those expenses are sustainable sort of efficiencies going forward. Quite comfortable that there is still a lot of runway there. Sorry, what was the other question in terms of?
Roy Mutooni: Would you prioritize margin?
Ferdi Moolman: Well, I think it is a mixture of everything. To get margin expansion, you need both top-line growth and cost efficiencies. I think in the market where we are, you have got to focus on everything. You cannot focus on the one and not on the other one. The reality, for example, is if we do push something like handsets, you will see the gross margin go down, but you will see an increase in revenue, more sustainable revenue. There is always a balance between these things. But I think it is both top line as well as expenses, and cost of sale as well as OpEx expenses, and obviously, as well as the cost of equipment depreciation and things like that. So, it is both. I would not prioritize either one of the two.
Roy Mutooni: Okay, there are two new questions that have come in, both for you, Ralph. First of all, the growth in fintech in Nigeria seems encouraging after launching the platform. How is the platform performing, and how do you see the fintech opportunity in Nigeria? I will combine that with, can you provide an update on tariff increases in Nigeria?
Ralph Mupita: Yeah. Let's start with the latter. I think we have been clear that with elections coming up, the discussion on tariff increases is not one that I think will get us too far, to be honest. With the authorities, we have spoken about talking after the elections about where we are, particularly now that we have had to pick up the burden of elevated energy costs. We also have quite onerous quality of service obligations to meet, et cetera, et cetera. So, I think that one is a matter that is much more a Q2 discussion of exactly where we are. But I think we can give you comfort as investors that the conversations are ongoing about what is the right form of pricing regimes, because there are developments across the rest of the continent. Some have floor prices, some have full deregulation on pricing, et cetera.
Ralph Mupita: That discussion is very much alive, but we would not want to give you any commitment right now about exactly when we think we will make progress. On fintech, yes, we have migrated from ECW, which is a platform that served us well, and actually all the other markets are still on ECW, Ericsson Converged Wallet platform. We have moved to Alipay. The cutover was pretty much as these cutovers go, and I think they went well. There are still some customers on the fintech platform, or on the old platform, so we are migrating these as we go along. We have launched a new app. So, all of that is kind of foundational work for us, as we still remain excited about the fintech opportunity. We have spoken about the other areas that we focused on in Nigeria, the structural separation. We are engaging the CBN around that.
Ralph Mupita: Then obviously, the point that we raised earlier in the year that the MoMo PSB license is quite limiting in the capabilities. The basic services in Nigeria, the monetization opportunity there is low, so we do need to move kind of up the ladder in terms of your licensing, and we have spoken about our desire to get a regional banking license. We have made the right applications and processes, so all of that stuff is sitting with the Central Bank of Nigeria.
Roy Mutooni: Thanks, Ralph. The last question for you, Ferdi. Could you give us some more color on the End-User and Subscriber Service Charter Regulations due to take effect early in the new year?
Ferdi Moolman: Yeah. As you are aware, ourselves and Vodacom have taken ICASA to court, so I do not think it will be appropriate for me to discuss the details of what sits in there. Suffice to say that ICASA has reached out to everybody in the market. They have engaged us, and we are hopeful and encouraged that we will find a solution for the regulation. Within this year, we are still hoping we could find a resolution for it.
Roy Mutooni: Thanks. Sorry, there is one more question that has just come in. How are you thinking about Ghana in relation to Orange's plans to enter the market, and similarly, on OPay's rumored intention to compete in Ghana on fintech?
Ralph Mupita: Look, I mean, competition is always good. It keeps you on your toes. Ghana, obviously, the team are doing an excellent job there. But competition comes in, we welcome that. We think we have a strong business there. We have pretty much 80% plus of all the data that is kind of the network traffic is MTN. So, they will have to build sites and so forth as they expand. We are not particularly deterred, but as I said, competition is good. Always keeps you on your toes.
Roy Mutooni: Thanks, Ralph. That is all the questions. Would you like to wrap up?
Ralph Mupita: Yeah. I mean, I guess, to thank the investors for your continued support to the investment case. Any questions that you may have after this call, please send them to Roy and the team, and we will endeavor to answer them as quickly as possible. Some of you will see in a variety of conferences that are happening this week and before the end of the year. If there are any material developments, obviously, we will get back to you as investors. Thanks very much.
Roy Mutooni: Thanks, everyone, for your time and your attention. You may disconnect the call.
