MTN Group's share price drops despite strong performance in Nigeria

MTN Group’s share price plunged sharply on the Johannesburg Stock Exchange on Friday, dropping nearly 9.4% to R208.30, despite the telecom giant reporting strong financial results from its Nigerian operations. The decline came amid ongoing legal disputes involving its Ghanaian subsidiary, MTN Ghana, which faces a lawsuit from Clydestone Ghana over alleged intellectual property violations related to mobile money services. According to MTN Nigeria’s interim results, the company recorded a strong first-half performance, driven by sustained commercial momentum, improved profitability, and robust cash generation. Total subscribers rose 8.9% to 92.2 million, while active data users increased by 9.3% to 55.7 million. Service revenue surged by 25.9% to N3.0 trillion, and earnings before interest, tax, and depreciation jumped 39.2% to N1.7 trillion. Earnings per share climbed strongly by 70.6% to N33.7, with an interim dividend of N26 declared. Free cash flow also rose significantly, increasing by 73.9% to N712.7 billion. MTN Nigeria CEO Karl Toriola highlighted the resilience of demand for the company’s services and noted that the naira’s relative stability during the period helped moderate some cost pressures. He emphasized that commercial momentum remained strong, with 4.9 million net subscriber additions lifting the total subscriber base to 92.2 million. Active data users grew by 2.5 million to 55.7 million, reflecting stronger customer engagement and sustained demand for data-rich services. Service revenue growth exceeded medium-term guidance, reaching 25.9% compared to a minimum expectation of low-20% growth. It also surpassed the average inflation rate by 10.4 percentage points. However, growth slowed slightly in the second quarter due to the full annualisation of previous price adjustments and a temporary suspension of the airtime and data credit service, which affected fintech revenue. Excluding this impact, service revenue growth stood at 27.3%. Toriola acknowledged challenges posed by energy cost pressures but noted that the company continued to invest in its network while keeping operating expenses growth to 11.3%. Capital expenditure reached N620.5 billion, aimed at strengthening the network and supporting future growth opportunities. Revenue performance across all business segments reflected strong underlying demand, disciplined commercial execution, and continued customer adoption of data and digital services. Data revenue saw a notable increase of 38.4%, driven by growth in active data users, higher smartphone penetration, and sustained demand for high-speed connectivity. Smartphone penetration reached 66.4%, underscoring data as the largest structural growth opportunity. The home broadband segment was being expanded in a disciplined manner, with a focus on improving conversion rates and enhancing customer value while maintaining attractive unit economics over time. Meanwhile, MTN Ghana faces a legal challenge from Clydestone Ghana, which has filed a lawsuit at the High Court in Accra. The case centres on allegations that Clydestone played a role in launching mobile money services in Ghana nearly two decades ago and accuses MTN of breaching intellectual property rights. MTN Group has categorically denied these claims, asserting they are unfounded and will be vigorously contested. MTN Ghana stated that its operations would remain unaffected by the legal proceedings and confirmed that no provisions have been set aside for the dispute.