MTN Rwanda reports strong Q3 performance driven by fintech growth

MTN Rwanda has reported a strong third-quarter performance, with ebitda increasing by 26.9% to Rwf42.2bn, driven by the growth of its fintech business. The company's profit after tax also saw a significant increase of 81% to Rwf13.2bn. This growth is attributed to the company's sustained subscriber base growth and robust service revenue. The company's service revenue grew 20% year on year to Rwf259.4bn.

The fintech business, particularly MoMo, was a key contributor to the company's growth, with MoMo revenue growing 29.1%. The company's mobile subscribers increased by 7.5% to 8.7-million, while active data subscribers grew 15.9% to 2.9-million. Active mobile money users also increased by 12% to 6.5-million. CEO Monzer Ali stated that the company's growth was diversified, with data, enterprise, and fintech emerging as important contributors to overall performance.

The company's growth was supported by Rwanda's strong economic momentum, with real GDP expanding 9.7% year on year in the first half. The company's performance in the nine months also benefited from a moderating depreciation of the franc, which contained dollar-denominated costs. Ali noted that the company's growth was achieved despite elevated inflation and tighter monetary conditions, which constrained household spending and added to cost pressures.

The National Bank of Rwanda's eKash system, which went live on July 14, has also had an impact on the company's performance. The system routes domestic interoperable transfers between bank accounts and electronic-money wallets through a unified instant-payment rail, with customer fees capped at Rwf20 for transactions below Rwf10m. Ali stated that while the impact on the company's Q3 performance has not been material, it remains early in the adoption cycle.

The company expects inflation to ease and the franc's depreciation to moderate, with GDP growth forecast at 7.8% for the year. MTN Rwanda reaffirmed its medium-term guidance of "mid-teens" service revenue growth, an ebitda margin of 40%-42%, and capital expenditure intensity of 7%-10%. The company will provide a further update on the eKash system's anticipated effect on its connectivity and fintech businesses with its annual results.

The company's nine-month ebitda margin expanded by 3.1 percentage points to 43.1%, above its medium-term guidance range. This reflects robust service revenue growth and the benefit of its expense efficiency programme, which offset inflationary cost pressures. The company's profit after tax for the nine months was 130.3% higher at Rwf30.3bn.

Looking ahead, MTN Rwanda expects to sustain growth in service revenue and profit after tax, supported by cost management. The company's strong performance in Q3 and the nine months demonstrates its ability to drive growth in the Rwandan market. Key factors contributing to the company's growth include the expansion of its fintech business, robust service revenue growth, and a moderating depreciation of the franc.

Key points

• MTN Rwanda's ebitda increased by 26.9% to Rwf42.2bn in Q3.
• The company's fintech business, particularly MoMo, drove growth with a 29.1% increase in revenue.
• MTN Rwanda reaffirmed its medium-term guidance of "mid-teens" service revenue growth and an ebitda margin of 40%-42%.