Loadshedding forces MTN to spend R695 million on costs

With load shedding still continuing to hit many sectors of the economy, MTN has seen its costs rise to R695 million in 2022 alone.

MTN is South Africa’s second-biggest mobile network estimated that load-shedding cost its operations in the previous year.

In the MTN Group annual results for 2022, the telecoms operator said that operating conditions were significantly impacted by national grid power availability worsening in the second half of the year.

“We estimate that the overall effect of load-shedding on topline and costs resulted in a negative impact of R695 million (or 3.4%) on MTN South Africa’s EBITDA (earnings before interest, tax, deductions, and amortisation),” MTN said in a statement.

“Power supply in South Africa was an ever-increasing risk through 2022 with 208 days of load shedding – 146 of these in H2.

“This impacted not only network availability but also some business functions, which hampered our customers’ ability to recharge and upgrade their packages.

“Our investment in this regard, which included dealing with vandalism and additional security on sites, put additional pressure on operating costs.”

In South Africa, MTN racked up R15.39 billion in capital expenditure in 2022 towards its tower infrastructure investments, which included backup batteries.

The mobile telecoms operator has now estimated to spend another R13.24 billion on capex in the country in 2023 per BusinessTech.

“Considering the increased frequency and intensity of stage 6 load shedding and the potential threat of stage 8, MTN SA is working with its partners on further optimising sites to ensure consistent performance of the resilience upgrades,” said MTN.

“The anticipated higher frequency and intensity of lead shedding has impacted MTN SA’s outlook for both service revenue and costs.”

According to the Group CEO Ralph Mupita, he said the company delivered a solid operating and financial performance in 2022 as they continued to execute our network resilience plan.

“We are pleased with the business’ continued resilience under challenging global and regional macroeconomic conditions,” he said.

“However, given the higher-than-expected power and network security costs and a re-assessment of the management fee agreement with the Group, we are revising the targeted range for MTN SA’s EBITDA margin to 37-39% (previously, 39-42%).”