Scancom PLC (“MTN Ghana”) released its unaudited 1Q2025 results yesterday and surpassed our expectation, posting a significant 53.7% y/y growth in earnings outturn to GHS 1.7bn. Revenue surged by 39.4% y/y to GHS 5.4bn while EBITDA improved by 45.0% y/y to GHS 3.1bn. As anticipated, MTN Ghana’s performance was chiefly bolstered by robust growth in data revenue (+54.9% y/y) to GHS 2.8bn and mobile money revenue (+53.1% y/y) to GHS 1.3bn. Voice revenue increased by 6.2% y/y to GHS 951.0mn. Furthermore, the company experienced a 5.2% y/y increase in mobile subscribers to 29.2mn. Also, MTN Ghana successfully expanded its active data and mobile money subscriber base, growing by 10.8% y/y and 11.5% y/y to reach 17.8mn and 17.4mn subscribers, respectively.

MTN Ghana continues to navigate the prevailing macroeconomic headwinds and is committed to implementing commercial initiatives under its “Ambition 2025” strategy by investing in the development of its platforms as well as preserving liquidity and strengthening the balance sheet. In our view, the results of this strategy have been impressive so far and we expect the yet-to-be published successor medium-term strategy to consolidate these achievements as “Ambition 2025” draws to a close this year. In the outlook, MTN Ghana has revised its medium-term guidance of high-twenties (in percentage terms) to between the low to mid-thirties growth in service revenue. This indicates a strengthening of revenue growth prospects for an already strong momentum and we remain confident that the Telecoms giant will meet this guidance in the near-term, having consistently surpassed our expectations. The Communications Minister issued a directive to the National Communication Authority to make additional spectrum available to both MTN Ghana and Telecel with aim of enabling telecom operators to optimize their existing infrastructure and enhance network quality and coverage. We believe MTN Ghana is strongly positioned to benefit from this development given existing infrastructure leadership. Additionally, we expect the removal of the e-levy to drive higher digital payment adoption via Mobile Money Limited, bolstering revenue and profitability.

 

Outlook: Revenue growth and disciplined cost management initiatives to drive bottom-line growth in FY2025.

• We anticipate that continued investment in network expansion will enhance service delivery, improve data transmission speeds, and attract a broader customer base. These infrastructure developments, when aligned with ongoing customer experience improvement initiatives, are well-positioned to support consistent revenue growth over the near to medium term. Furthermore, we expect enhanced network stability and broader coverage to drive higher data usage, providing an additional lift to topline performance.
• The company invested GHS 779.5mn in ex-lease capex during 1Q2025 to maintain network quality, expand coverage and capacity, and enhance IT systems. We expect this to enable MTN to capitalize on the increasing demand for data by expanding access, particularly in rural areas and by promoting the adoption of smartphones to support sustainable revenue growth and profitability.
• MTN Ghana has finally signed a long-term National roaming agreement with Telecel Ghana. We expect MTN Ghana’s collaboration with AT and Telecel on the long-term infrastructure-sharing agreement to optimize capital efficiency, reduce average operational costs, and accelerate network expansion. The partnership should improve profitability by lowering maintenance and deployment costs, reinforcing MTN Ghana’s ability to capture growing data demand while maintaining competitive pricing.

• We anticipate that MTN Ghana’s continued investment in enhancing its myMTN and MoMo applications would drive customer engagement, transaction volumes, and service adoption. Additionally, expanding partnerships with financial institutions, agents, and merchants will further strengthen the MoMo ecosystem. While regulatory challenges remain key risks, effective execution of these strategies will be crucial for sustaining long-term growth in digital and financial services.
• The removal of the e-levy will serve as a catalyst for increased digital payment adoption through Mobile Money Limited. We expect the abolition to stimulate transaction volumes (particularly for P2P transaction volumes), enhance user engagement, and drive higher monetization of MoMo services, ultimately boosting revenue growth and strengthening overall profitability.

• The minister of communication issued a directive to the National Communication Authority to make additional spectrum available to both MTN Ghana and Telecel Ghana, the policy aims to enable telecom operators to optimize their existing infrastructure and enhance network quality and coverage. We believe MTN Ghana is strongly positioned to benefit from this development given its existing infrastructure leadership as the additional spectrum will enhance its service quality and dominance, especially in rural and underserved areas, supporting revenue growth.

• We expect the Data Protection Commission, the National Communication Authority, Cybersecurity Authority and MTN Ghana to work collaboratively to resolve the potential data breach on MTN-related systems. In our view, the rising incidence of fraud within the MoMo ecosystem could undermine user confidence, potentially impacting MoMo float levels and posing operational and reputational risks to Mobile Money Limited.

• Overall, MTN Ghana remains committed to its Ambition 2025 strategy, focusing on platform development, liquidity preservation, and balance sheet strengthening. In our view, the execution of this strategy has yielded impressive results thus far. As Ambition 2025 nears completion this year, we anticipate that the forthcoming successor medium-term strategy will build on these achievements, ensuring continued financial resilience and strategic growth.

 

Valuation: Under Review