Lights Out, Profits Down: Estimating the Economic Impact of Load Shedding on MTN

South Africa’s second-largest mobile network, MTN, has revealed that load-shedding cost the company R695 million in 2022. MTN Group’s annual results showed that the national grid’s power availability worsened in the second half of the year, negatively impacting MTN’s operating conditions. The company estimates that the load-shedding’s overall impact resulted in a negative impact of R695 million, or 3.4%, on MTN South Africa’s EBITDA. MTN has been implementing a “comprehensive network resilience plan” to mitigate the impact of load-shedding, including additional investment in backup batteries, generators, and enhanced security features.

The resilience plan began rolling out in the second half of 2022 and is expected to be completed by May 2023. The company’s South African business had R15.39 billion in capital expenditure in 2022, including investments in tower infrastructure such as backup batteries. MTN anticipates spending R13.24 billion on capex in the country in 2023, including the rollout of additional batteries, generators, and enhanced security features.

MTN has acknowledged the significant impact of load-shedding on its operations, with South Africa’s outlook for both service revenue and costs expected to be affected by the increased prevalence of load-shedding above stage 4 in the medium term. Despite this, MTN South Africa still achieved 3.6% growth in service revenue and a 4.7% increase in EBITDA in 2022. Load-shedding’s impact has also been felt by other telecoms operators, including Vodacom, Telkom, and Cell C.

Also Read:   Solar Panels: The New Crime Frontier in South Africa

Load-shedding has also impacted mobile data speeds in South African neighborhoods. According to a recent analysis by Analytico, some of the top-performing neighborhoods previously recorded average download speeds of over 100Mbps. However, the top speeds achieved so far this year are lower, and the continued presence of load-shedding suggests that degraded performance may be due to power outages.

Wireless Access Provider Association executive committee member Paul Colmer recently noted that load-shedding has had a particularly bad impact on 5G, which consumes more power. Colmer said that mobile operators are being forced to recalculate the costs of their next-generation network rollouts due to the additional backup expenditure.

In summary, load-shedding has had a significant impact on the operations and finances of MTN and other telecoms operators in South Africa. The continued presence of load-shedding has also affected mobile data speeds in some neighborhoods, highlighting the urgent need for increased investment in backup power solutions.

This content was generated by artificial intelligence - more information