MTN, a telecoms company, has announced that it will be raising rates in a few markets as a result of the high rate of inflation in the industry.
This information was provided in its first quarter report, which was submitted on Thursday to the Johannesburg Stock Exchange.
In its outlook for the rest of 2023, the MTN group said;
We anticipate that trading conditions across markets will remain challenging for the remainder of 2023 and we will continue to execute on our proactive measures to manage the near-term challenges and risks.
Within this environment of elevated inflation, implementing selective price increases across the portfolio remains a critical priority to ensure that operations generate sufficient cash flows to fund future capital expenditure needed for building world-class networks.
We will continue to have the necessary engagements with the regulatory authorities on such needed increases.
MTN, which has operations in 19 nations, including South Africa, Nigeria, and Ghana, reported that overall inflation across its footprint was 18.5% in the first quarter of 2023, up from 11.5 percent in the same period the previous year.
In order to combat inflation, central banks raised interest rates throughout that time. The corporation claimed that higher interest rates and inflation had a negative impact on consumer purchasing power and corporate activity.
MTN Chief Executive Officer Ralph Mupita, in the statement, said;
MTN’s resilient business model and operational execution enabled us to continue to successfully navigate difficult macroeconomic, geopolitical and regulatory conditions in Q1 2023.
Local currencies generally weakened against the dollar, and foreign exchange availability was limited in several of our key markets affecting the pace of capital expenditure and our ability to upstream dividends and management fees.
Over and above reduced economic activity in South Africa, MTN South Africa’s (MTN SA) network availability remained under pressure due to ongoing power outages across the country: there were approximately 90 days of load shedding in Q1 2023 compared to 14 days in Q1 2022.
On the Nigerian market, the group said;
MTN Nigeria drove strong commercial momentum in a challenging operating environment to deliver a strong financial performance in the period.
In addition to higher inflation and interest rates as well as challenges with the availability of hard currency liquidity, the Nigerian economy was also impacted by the Central Bank of Nigeria’s redesign and introduction of new naira notes from 15 December 2022.
The limited availability of new notes resulted in cash shortages, which impacted customers’ ability to recharge through physical channels and transact within the MoMo agent network.