MTN Group Limited (MTN) Earnings Call Transcript & Summary

Good day to everybody, and thank you once again for taking the time to dial in to discuss MTN Group's trading update for the period ended September, the 9 months ended September. My name is Thato Motlanthe. I'm Head of Investor Group -- Investor Relations at MTN. And on the call with me this afternoon are Ralph Mupita, Group CEO; as well as Tsholo Molefe, who is our Group CFO. Just as a reminder that our trading update was published this morning on the JSE, and it's posted on our website on the Investor Relations page. I trust you all had a chance also to look at the Q3 releases from our listed operating companies and they published in their respective markets as well as had their own investor calls. So just for today's call, we'll want to keep it a little bit focused in terms of our overview of the Q3 performance. Just reiterating key highlights, and Ralph will run you through the agenda. And that's just before we open up for Q&A. So Ralph, I'll introduce him in a second, will kick us off with an overview. Tsholo will come in with the brief financial highlights, and then Ralph will round up with some forward-looking comments and our focus areas. So we are scheduled for about 1 hour for this call. And on that note, it's my pleasure to hand over to Ralph.

Thank you very much, Thato, and a very good afternoon from me as well. I trust everybody is keeping well. I would like to cover about 6 areas in our overview commentary before we open up for Q&A. And these areas are as follows: sense of overall performance in the period. The second is the momentum that we're seeing in the MTN SA. The third area we'll cover is the impacts on the MTN Nigeria margin and guidance. Fourth area is the momentum we're seeing in the FinTech business. Tsholo will round off the last 2 areas, which are effectively the FX revaluation in Nigeria. She'll cover that as part of her financial overview and she'll also cover the tender offer for the outstanding 2024 bonds, where we released respective communication the Irish Stock Exchange. So let me pick up on the first item, which is our overall performance highlight. If we look at the performance, the macro remains challenging with inflation remaining elevated and local currencies under pressure. On inflation, we did see some encouraging signs of easing as inflation started to subside in markets like South Africa, Ghana and Uganda. In terms of exchange rates, the key impact was the devaluation of the naira which closed at around NGN 780 to the $1 at the end of September. Although load shedding in South Africa was a lot more severe on a year-on-year basis, we were encouraged by the progress made in MTN South Africa's resilience program. This is tracking slightly ahead of our plan and helped to push availability in the network above the 95% threshold. We actually closed September 2023 at 96.2 as a national average availability. We have largely completed Johannesburg and Western Cape and very good progress in petroleum KZN. And all of those are areas that deliver the largest revenue contribution to South Africa. If I zone in on our overall performance, we have been focused on execution operationally and strategically. We sustained our investment in deploying ZAR 26.2 billion of CapEx in the 9 months, excluding leases. And this is reflected in our network NPS scores, which where we hold the #1 position in 11 of our markets as of the end of September. This includes some of our larger markets like Nigeria, Ghana and Uganda. South Africa remains #2, but significantly narrowing the gap to #1 given the progress we've made on the network Brazilian plant. Overall, our CapEx intensity of 15.9% was within our target range of 15% to 18%. On our commercial metrics, very strong. Again, you'll have seen this in our release, but let me call out some of the key areas. Data traffic was up 20.1% year-on-year in the period and even stronger at 35% when you exclude the joint ventures. Fintech transactions grew by about 34% year-on-year, reflecting the ongoing robust development of our ecosystem. You'd have heard us say in the past that these trends really underscore the structural growth opportunities we see for our business for the medium to longer term. Overall, this helped us to deliver solid top line growth of 14.2% in constant currency terms. Which is within our medium-term target of mid-teens digit growth. If you exclude Sudan, the growth was even much stronger. EBITDA was up 11.2%, with the underlying margin down a percent to 43.2% on a constant currency basis. I will leave it to Tsholo to provide some color on this. What a really resilient performance in difficult conditions with solid top line growth as well as EBITDA. My second topic is momentum in South Africa. Looking at the 2 largest [ rockers ] and starting with South Africa. One of the key highlights of our results was the pleasing momentum that we saw in the business, particularly relative to what we had previously communicated. Over and above the progress on the network, the first thing to notice is the year-on-year service revenue progression over the 3 quarters to September. Q3 in particular, had service revenue growth of 4.1%, compared to 1.3% in Q1 when we started the year and 2.5% in Q2. The second callout is the margin of 37.1%. Again, we highlighted the gradual improvement from the first 2 quarters when EBITDA margin was in the order of 36%. So we are very encouraged by this progress. We believe that the business is well positioned to continue this trajectory of steady improvement in service revenue growth and EBITDA margin expansion. We continue to anticipate that the network resilience program will be substantially complete by end of Q1 next year, might slip a little bit into Q2, and that will complete us with an overall envelope of ZAR 4 billion to ZAR 5 billion having been made -- having been invested for our close to 13,000 sites that we have across the country. Let me move on to talk about Nigeria and cover the issues around the MTN Nigeria margin and guidance. Karl and team covered their results last week, but I will spend a bit of time to just frame the EBITDA margin development there. MTN Nigeria covered this, but let me provide some further detail here. The first point is that you'll have seen in the Q3 margin came down to 47.8 percentage points in constant currency terms. This compares to 53% in H1, which meant that the year-to-date average came to 51.7%. Now this trajectory is in line with what we had guided with our H1 results, in that, you would have margin compressions in the next few quarters due to FX and other effects. We also explained that Q4 would likely see the full impact, given the spread of TowerCo leases, some of which passed through the FX effects based on the quarter end rate or [ other statement ] average of the preceding quarters. As I said, this means that the full effects of the [ Nigeria developments ] will come through in Q4. In terms of the guidance provided with the MTN Nigeria results that the full year margin would be somewhere between 47% and 49%. This was designed to provide the market with a tighter steer as to what was the likely margin outcome for the full year 2023. We have flagged probably since last year that there are factors that push our near-term margin in Nigeria to fall below 53% and 55% corridor that we target over the medium term. As I read the market reaction to the Nigeria results and commentary, there has been a little bit of confusion about the implied Q4 margin. Let me unpack some of the key dynamics at play, and these points will be covered more fully by Karl and Modupe at the Capital Markets Day in Abuja next Wednesday. There are probably 3 key points to call out over and above the normal inflation as well as factors like network rollout effects and the acceleration of MoMo PSB. The first is the FX impact, which we have discussed in the past and the sensitivities there, I think, should be relatively well understood. We have indicated that broadly a 10 percentage movement in the naira versus the U.S. resulted in an impact of 1.3 percentage points on EBITDA margins on an annualized basis. Then we have the VAT on leases, which is the second effect I'd like to raise. This was introduced at the beginning of September and has a negative impact on EBITDA margin of about 1 percentage points also on an annualized basis. The third important factor baked into the FY 2023 Nigeria margin guidance is that a provision is expected to be raised in relation to the first VAT assessment, whilst the matter is under appeal. This we've done to be prudent. And there have been news of this in the past couple of weeks. The provision amounts to an annualized EBITDA margin impact of about approximately 1.3 percentage points and of course, this will all be provisioned in Q4 2023. Some of you would probably need to reflect, as you're looking at the Q4 margin that this would be seen as something that it is, once-off and exceptional. But it is in that 47% to 49% guidance has been some provision to VAT's annualized amount of 1.3 percentage points. Over and above what I've outlined, there are a couple of factors informing this, which include initiatives being implemented by MTN Nigeria. These are both in top line initiatives and expense efficiencies, which we believe can mitigate the pressures we're seeing where the naira lands up as well as the inflationary trajectory. The coming months will provide us with an opportunity to assess the traction in these in order to provide the market with an updated view on our guidance outlook for MTN Nigeria. The MTN Nigeria team will talk to all of this at the CMD next week. But from these effects, you can appreciate that the VAT assessment provision is a once-off that has a material impact on the EBITDA margin forecast for this year. And as I said, we're optimistic about our chances of success at the appeal. The other topic I wanted to cover was the FinTech momentum. We're very encouraged by the accelerating profile of our FinTech business. I have highlighted the 34% increase in transaction volumes, our transaction value was up 57% in constant currency terms. This was supported by good progress in our other ecosystem KPIs like our agents and merchant footprints, which were all up 11% and 79%, respectively, in the period. We see very good growth underlying in Q3 as we move from Q2. And I think we've been really encouraged by the growth of advanced services. Advanced services have grown 61.8% in the period, seeing good growth in payments and in BankTech and still solid growth that we see in basic services. We continue to be excited by the acceleration that we're seeing and we continue to -- in our discussions with Mastercard towards concluding the minority investment in Group Fintech. This has taken a little bit longer than we anticipated, and we'll be able to update the market once the processes will all be -- been concluded. Let me pause here and hand over to Tsholo, and I'll come back with some concluding remarks. Tsholo over to you.

Thank you, Ralph, and good afternoon to everyone on the call. Ralph has covered some of the headline performance metrics with a solid top line performance in a very challenging market. Our service revenue growth of 14.2% in constant currency shows resilient performance and EBITDA growth of 11.2%. I just want to highlight some of the salient underlying features of our financial performance. So the first highlight is our expense efficiency program, where we realized about ZAR 1.5 billion in savings in the period. which underpinned our strong performance. This achieves the target we set for ourselves for the full year as we had indicated previously that we target a further ZAR 7 billion to ZAR 8 billion from 2024 onwards. So we were able to achieve ZAR 1.5 billion in the first 9 months and out of the investments in 9 months relating to the target that we set ourselves for the full year of ZAR 1.5 billion. The second point to make is on our balance sheet, where we reported a consolidated group net debt-to-EBITDA of 0.5x. This was relatively steady on our last report and remains very comfortably within our covenant limit of 2.5x. Our Holdco leverage was also flat at around 1.5x, really underpinned by the upstreaming that we saw in the third quarter of this year. We have trimmed about ZAR 3.8 billion in the third quarter bringing the total upstreaming for the year-to-date to ZAR 8 billion. A short one ago, just before this call, we also announced that our treasury team has kicked off the process to [ any settle ] our 2024 advance and dollar-denominated euro bonds, we've issued an invitation to eligible note holders of the 750 million dollar notes, of which 450 million remains outstanding, to tender their notes for repurchase by MTN. You will recall that we did a $300 million in settlement of these notes sometime last year. We are very pleased to get the ball rolling on this as we have discussed with the market previously, as this aligns to our priority to improve the currency mix of our Holdco debt. My final point before handing over back to Ralph is on the FX provision that was announced last week with MTN Nigeria's results. We outlined in this, our group announcement as well -- in the sales announcement we issued as well. As a recap of what you saw in our announcement, MTN Nigeria utilizes trade lines to fund the establishment of confirmed irrevocable letters of credit for its largely U.S. dollar-denominated network CapEx investment that sustains our revenue growth. The business then holds naira denominated cash cover with plans to support these facilities, essentially a cash collateral. The significant depreciation of the naira against the U.S. dollar following the digitalization in June 2023, therefore, gave rise to unrealized ForEx losses relating to these trade obligations. There was, therefore, an incorrect application of how this should be treated in our interims of this year, where all the MTN Nigera's trade lines were remeasured after offsetting the naira-denominated cash collateral. I think we did highlight the impact expected on H1 2023 of between $0.64 to $0.65 per share on our metrics. And this will be made formally when we report on our interim results of 2024 next year. To remind investors, this is just a once-off adjustment relating to a unrealized effect that is noncash in nature. So on that note, I'd like to then hand over to Ralph. Thanks very much.

Thanks so much, Tsholo. And as you mentioned, we're very pleased with the progress we've made now on on the deleveraging. It's our second in our capital allocation priorities. We've said that we want to extinguish -- reduce materially the dollar exposure of the local balance sheet to dollar debt. So we're very pleased that we're launching that tender offer. It's an any and all offer that you'll see all the details on the Irish Stock Exchange. And hopefully, we'll be able to close that out in the next couple of weeks. So just on an auto basis, maybe a couple of key messages. I think firstly, the operating environment, we think it will still remain quite challenging. We have a business that has got robust in scale to be able to navigate through some of those challenges. South Africa, again, pleased with the network resilience program and slightly ahead of our own plans and making very good progress as we kind of work through region by region. The big regions have substantially been completed and the resilience is really showing off in the network availability in the regions, quite a bit of work still to do in the northern region and in the Eastern Cape. But that's all work that we'll push to close out in Q1, slightly early Q2 next year. So the big thing to watch out is network. And as we look at even some of the progress we've seen in the October numbers. Again, we're seeing that performance from South Africa coming through. So that's the one area that I will focus on the outlook is the network availability. Nigeria, we focused a lot today in covering the margin set of issues and how to think about what is once-off within the margin guidance. As I said, I think for those who are doing modeling and looking through to next year, you're going to take out on an annualized basis, that's 1.3 percentage points which basically refers to the conservative provisioning against the tax matter, which we're appealing. I do think it's also important to note that whilst we have been waiting for the tariff increase and we remain highly engaged with the authorities, we have launched actually several data bundle plans in Nigeria. In more recent weeks, that should really help us improve the yield. And so we will continue with that optimization work and the new plans, as well as to seek the tariff increase with the authorities. So that work continues. As I mentioned twice in my remarks, we have a Capital Markets Day next Tuesday and Wednesday, in Nigeria, and I think the team will give you a lot more color around the progress we're making there as well as [indiscernible]. If I look at the financial resilience points that we put in our outlook, we're pleased with having made progress with expense efficiency. The target for this year. We are well arranged to pursue the next ZAR 7 billion to ZAR 8 billion. That's over the next 3 years. These targets have been built up kind of bottom up across the markets as well as head office. So we should be able to show you some meaningful progress over and above the ZAR 1.5 billion that has been achieved already by the end of Q3. We'll continue to seek out these efficiencies. And then on the deleveraging, as I said, we're looking to close out on the 2024. And once that's done, we'll set our sites on 2026 and sometime in the course of next year and into 2025. And then on strategic priorities, once our focus, completes. The Afghanistan exits, we continue to work on the small [indiscernible] markets to simplify the portfolio and the work that we're doing with Mastercard all wanting -- all of this to be largely done in the course of this year. On the small eco markets, that will probably take us a little bit into next year. These things do take time. But we remain committed to keeping the portfolio a bit simpler than it has been and committing all our efforts in human and capital towards that. And the final point really is around the medium-term guidance, 2 points to reiterate. The CapEx guidance remains unchanged from last time. So this should keep us in the range 15% to 18%. And we are -- the Board continues to anticipate a full year dividend of a minimum of $3.30 for full year 2023 paid in April 2024. So with those outlook remarks, Thato, maybe we can switch over to the lines and take some questions.

Thanks, Ralph. Thanks, Tsholo. I'll maybe ask the question in banks of 2 or 3. Maybe before we do that, there's just a question on trades just to be absolutely clear. In terms of the Nigeria margin discussion. So is the 47% to 49% margin guidance for Nigeria, inclusive of all the 3 points mentioned.

It's inclusive of all the 3 points mentioned. I mean the big delta is that the provision that we've taken. As I said, we're still confident of our appeal position that will be included, and that's in the 47% to 49% takes into account all of those items.

Let me just move on to a couple of other questions then. Can you please give us a breakdown what's sort of -- please give us a breakdown of upstreaming and where that came from, number one. And then number two, which is in relation to SA, maybe for Tsholo. Good progress on network resilience in SA, do you have a target of what percent you're looking for? And how much more you want to spend on it just some clarification points. Tsholo you have the first question.

Yes. So I mean, as I indicated, we've been able to upstream ZAR 3.8 billion in the quarter, about a ZAR billion, just over ZAR 1 billion from South Africa. Uganda also just over ZAR 0.5 billion and Ghana, as you know, that, obviously, we wait for the Central Bank to [indiscernible] with a conversion to dollar. So it is sitting in our CD bank account. So we've been able to upstream there as well, just under ZAR 8 billion. Cameroon, [indiscernible] so quite pleasing to see all the markets coming to the party as well as spending as well.

Yes. On this [ SA], this year we'll spend probably ZAR 10 billion of CapEx in South Africa as to our guidance. ZAR 2.5 billion of that will go into the resilience initiatives that we've had. We've always communicated that we'll spend ZAR 4 billion to ZAR 5 billion. So in the early -- for Q1 next year, a little bit into Q2. So I anticipate another ZAR 1.5 billion to ZAR 2.5 billion to get us to what we would say, we build resilience at that stage 5, 6 level to. I mean we target ultimately the network of this quality. We want to be able to get 99.7%. I mean anything above 97% starts looking respectable. But to get to the #1 NPS, I think we'll have to be above 99%. And that's obviously assuming that we don't have load shedding substantially above level 6 for a long period of time. But very good performance from Charles and the team in the network rollout in resilience.

Thank you, both. There are a couple of questions just around IHS, maybe let's turn to those. And the first part of the question is, with the move of sites from IHS to ATC in Nigeria. How do you think about the risks related to that transition? And then second one, are you able to give a progress report on the IHS governance matter and what MTN has decided to do to move forward on the matter.

Let me start with the governance matter. Look, the governance matter is still a work in progress. We've had numerous engagements now with the IHS management to the Board. We've also spoken directly to the larger shareholders in IHS probably the top 6, 7 shareholders. We know who probably holds pretty much north of 80% of IHS stock. In relationship to our own governance matter, our understanding is we're done similar on their own governance matter. Yes, on the 2,500 sites that we've signed with ATC now to transfer from the first of January 2025, a key consideration was the operational risk of not being able to move all our equipment off the sites to an appropriate ATC site. So they will have -- with a lot of mines, obviously, very clearly on to which sites do they have proximity and therefore, we know which ones just moved across the -- across the way, so to speak. And where are there some new site builds. And where there's new site builds, what risks do we take and is there some sort of guarantee that ATC would provide us. So we talked about all of that. And we've had to think about the [indiscernible]. I've had to think about everything in the round. What kind of lease rates do we want? Nigeria wants a lease agreements that space and power and a technology-based pricing. So that has -- it has a meaningful NPV over a 10-year period. And so we thought about all of those, including this operational risk. And the team on the ground, [indiscernible] and Karl feel pretty strong that these are risks that can manage. It can also manage it with the radio planning, et cetera. So we spoke about the team have thought about the operational risks and they are manageable.

Thanks, Ralph. So maybe just a couple of questions around voice in South Africa, is a question that says, it looks like it remained under pressure despite the scaling of extra time and improved resilience. Is there more coming shift in behavior. And then another question, for Tsholo. Can you provide a rough guide on how the ZAR 1.5 billion expense efficiencies were split across all groups?

First one on voice of South Africa. I mean a big drag of growth in South Africa has been prepaid voice. And I think in many platforms, we've spoken about the holy grail for us on prepaid voice is to get it to high negative single digits, just knowing how mature South Africa is. A victory on prepaid voice would be a growth that's more like anywhere between minus 7, minus 9. So as you can see in quarter 1 of this year, voice was more like minus 16. So that was really a big challenge now come down to just over 10%. So I mean, on a trajectory basis, I think we are moving in the right direction. For an extra time we've changed providers. That's made a big difference since June. We're seeing extra time increase as part of the recharge. We're not at the levels of Vodacom. I think they're in the very high 30s, if not in the 40s if our intelligence is correct. I mean, so we are still in the mid-20s. There's obviously an optimum level of which you want extra time as a percentage of recharge, but I think we're still under indexed. And so their scope. And as I said, as we look at the progress we've made just and a month doesn't make a season. But when we look at the October numbers, we're encouraged that the trend on voice should be getting us in Q4 towards what we've always looked for, which is high negative single digits. So that's minus 7% to minus 9% is where we would see it. So trajectory-wise and this extra time provider, I think with them we should be able to get there not in this quarter, certainly in Q1 next year.

Yes. I mean on the expense efficiency about -- I think about just about 50% came from our 2 large markets, Nigeria and South Africa. With probably mostly from South Africa as well. I mean, across the board, we have been very deliberate in terms of making sure that we cut down on expenses that can be deferred, delayed including noncritical vacancies that we can ship so across all the markets. And we also saw that, that came through as well. So I think it hurts to say that, but the larger savings also came from network, about 1/3 of the expense efficiencies came from network, about another just over -- probably 15% from sales and distribution, yes.

Thanks, Tsholo. A couple of people asking, can you please elaborate on the developments at Mastercard and where we are in the process?

The developments, as we said the last time in August that we were going to go through [indiscernible] process. So that's where we still are so it's not completed. These things can take longer. So that's where we are. I mean, on the commercial side, I think we are ready -- we've done quite a lot of work around the proposition and I think we were probably a few weeks out towards launching in Rwanda to initiate the commercial relationship. So it's taken us a little bit longer, but we still did train. And I guess when we have completed that process then we'll come back to investors on where we've concluded and all the usual details that investors want to understand, what's the investment amount, et cetera.

And this is a question on CapEx. Year-to-date, the delta of ZAR 20 billion in CapEx guidance on IFRS versus by IAS is much higher than in the past years. Can you share any thoughts on why this is?

Yes. I mean, we obviously, as indicated, our lease has gone up and kind of the reason is that we have seen, as we indicated previously, we did do a renewal of the tower contracts in Ivory Coast as well as a Cameroon. There obviously has been an increase in volumes in Nigeria. So that would have taken our leases up and as a result, increasing the IFRS 16 [indiscernible] expenditure.

So another question on ISA. Can you comment on how much the residential business contributed to postpaid growth? And in the wholesale business, the entire telecom traffic in KZN now runs on your network. What other regions are you likely to onboard over the next 12 months?

Yes. We don't disclose the contribution, we don't disclose this. Yes. So you answered the question. On the Telkom traffic, just how you're thinking about the arrangements until we wholesale there. We continue to engage Telkom as we do with Cell C too. Network as a service is part of our strategy, and it's [indiscernible] where we started it. So we're seeing good progress. Look, we'll take incremental growth as and when it comes. They are looking to renew their contract, their wholesale contracts. I think it's coming up in Q1 -- end of Q1, early Q2 next year. So I mean, we'll sharpen our pencils and see if we can have more than just the KZN problem. So yes, we've been pleased with the growth there, but we'll continue to try and get more of the growth because we had the ability to carry that level of traffic. Cell C on the postpaid, on the postpaid -- sorry, the prepaid side and then also talk on but that's obviously these are competitive dynamics that will be in play.

Then a question on Nigeria. Given the rate of growth in traffic versus revenue, can you comment on the trend in implied effective tariffs and how does this reconcile to the objective of increasing prices?

Look, I mean, obviously, we've been at work across all our markets in Nigeria included in optimizing pricing. So optimizing pricing is a lot of term for many things. I mean, but one of them is to look commercially at promotional traffic that doesn't generate revenue. So we've been working on that actually for a couple of quarters now and reducing the kind of free traffic to increase the effective rate per gig. As I mentioned, in Nigeria, in recent weeks, we've actually launched a whole new portfolio of plans, data plans, which should support yields in terms of data. So we should -- that should help improve, so we had the first full month of it in actually in October. So we'll see it in Q4. So these things are all helpful reduction of some of the promotional activity as well as new plans. I mean, fundamentally, given where we see inflation impacts, exchange rate impacts, particularly on network costs, it is still much needed to have at an industry level, tariff adjustments for both voice and data. That doesn't change. And I know Karl and team continue to engage the NCC on that, because it's really an issue about industry sustainability. For sure, it's important for us as MTN, but you have a 4-player market in Nigeria and #3 and #4 in particular, cannot generate sufficient cash flow to fund next year's CapEx. That market can quickly move from 4 to 3 -- sorry, from 4 to 2 and even to [ unvest ] the message that we are having with the authority. So look, I mean, I still -- we haven't quite got the tariff increase yet. We've been able to launch these new plans with the approval of the NCC. So let's see where those conversations go. We still feel early convicted that ultimately, those tariff increases will come through.

[indiscernible] and then some questions on MoMo PSB in Nigeria. What do you expect from FinTech growth in Nigeria? And why are the cash shortages still being cited as an issue given that they appear to have abated in Q2 and then the second one is answered already.

Yes. Look, on MoMo PSB, I mean, we're not happy with where we are. Some are external factors and some are our own internal factors. So there are still no factors I don't think the cash shortage of H1 should be -- sorry of Q1, in particular, a little bit into Q2, but certainly not a Q3 factor, has been -- has impacted the way that we thought we would see the wallet development for the full year 2023. So but that's kind of out the way -- what we've been focusing now on is really do quite a lot of investments towards educating the customers, building the merchant ecosystem, et cetera. And that normally takes time, and we've seen that in other markets, it's not a straight-line development. You've got to create a minimum kind of scale effects for it to still push through. I mean we still remain convicted and 3 years out, we should be able to get 30 million wallets. That's as much -- we haven't lost that conviction. But it has been a difficult start in a challenging macro. The team will come on that next week in terms of how we remain super excited about the opportunity. But we're slightly probably behind on the rollout and our own expectation of wallets by the year-end. So how do we still believe it will develop? I mean, 3 years out, I mean, we think we would have done a decent job at ZAR 30 million. We've had a growth now 3.6 million wallets. So it's a bit of an improvement since H1. 5 million additional. We've provided additional investments in this quarter -- quarter 4, and that's kind of all in the EBITDA margin that we spoke about. We didn't want to highlight it in of itself, but it's not an immaterial amount that we put into really accelerate the ecosystem so that we can start seeing the growth of this particularly Q1, Q2 next year. I think if I annualize it and the EBITDA margin impact of what we call the Booster plan, that's just slightly over 0.5% of EBITDA margin for the full year.

Then there's a question on strategic progress. Can you just recap the rationale on the planned exits from the 3 smaller west WECA markets?

I mean the rationale that we took is -- I mean, the portfolio is -- we periodically review the portfolio to say what fits into the portfolio strategically, where can we add value as a group. And how does it align with our capital allocation priorities as well as the ability for these businesses to be self-standing and so forth. So there's a whole host of criteria we look at. And sometime back last year, we came to the conclusion that strategically, we weren't the best owners of these markets in the long term. We weren't able -- given just our risk framework and risk appetite, we were not probably the best owners of these assets. And hence, we took a decision on following some outbound interest that we would explore the exit. I think over and beyond the point of those 3 specific markets. It's important to reiterate to shareholders that we need this group to be able to add value to the markets and the markets need to be able to contribute to the group in its totality. And so we do on markets that can fund their own operations, upstream management fees, upstream dividends, you actually talk about the [indiscernible], the Cameroons. I know there's a lot of focus on South Africa, Nigeria and Ghana. But what we've seen in this period is that the heavy lifting from the other markets, Uganda, [indiscernible], Cameroon and so forth. So portfolio optimization is something that's always ongoing. We've already started -- we started prior to these 3 markets. We did communicate exiting the consolidated Middle East markets. Afghanistan is remaining on the consolidated, going to make -- try and make progress on those 3 WECA markets and kind of prune the portfolio there.

Thank you, Ralph. Just a couple of questions. Yes, across financial and strategic, one that says, would it make sense for MTN to diversify away from EM currencies. Is this something that you consider? And then you're running on a strong balance sheet. Has your net debt to EBITDA bottomed at this level? And where do you see this going in the next 3 years?

Yes. So maybe I'll start and then Tsholo will finish off where for I've forgotten. Look, I mean, what we said to be on strategy is that we want to focus our resources on the Pan African strategy. So we really believe we can be distinctive on the African continent. Ex Africa, to be frank with you, myself and the Board have not applied our minds. Actually, we are focused on kind of shrinking the portfolio and allocating capital judiciously to the markets where we think we can make a difference. And with this part of the portfolio that has much more a euro mix. So you see that in Cameroon, [indiscernible] those markets, they exhibit inflation impacts that look more like Europe, but the currency is pretty stable there. I mean, Uganda, if you look at the performance in Uganda, where inflation has been coming down. I think it's been in a really robust performance. [ Sylvia ] and team very well done there. And then obviously, we have South Africa and Nigeria being the [indiscernible] driver. But I think specific to your question, it's not a strategic thought for us to expand beyond our markets. And as part of, leading into the next question, as part of the strategy that we've taken, which is that we do want to reduce the exposure of the Holdco [indiscernible] to dollar currency mismatch. I mean, this whole tender offer is looking to optimize the company's debt maturity profile and currency mix. So that's where we are. And once we've concluded the 2026 bonds, I don't think we'll be talking about the Holdco leverage anymore. We just talk about group leverage because everything is pretty much in ZAR or in naira at a group consolidated level. So I don't know if you have anything to add.

Yes. No, I mean, Ralph, I think you've covered it. I think the focus in line with our capital allocation [ film ] work has always been to reduce the exposure to the nonbrand debt, which is essentially what we are doing. So hopefully, we're able to settle the remaining balance of the 2024 bonds. And then we'll focus on 2026 next year. And then I'm sure that trading of the capital allocation framework -- capital allocation will probably be a different priority order in the future.

Thank you both. And there is actually another question which is almost the opposite of that one. Does MTN group have any plans to obtain new operating licenses in new markets? We have not seen any interest since the interest in the [ European ] market.

Yes. I mean we're always looking -- we have an M&A team led by [indiscernible]. So I mean these guys are frantically looking at sort of the globe for opportunities, in-market consolidation opportunities, where do they exist? And where we're #1, we can take advantage of those and we look at the markets. I mean right now, we're very focused on allocating capital to our organic footprint that we have today. And dealing with the deleveraging, ensuring that we have headroom for the cash dividend for shareholders but we do look. And -- but we're going to be very disciplined on capital allocation to markets as and when they come. And if something does come up, we will talk to shareholders, but it doesn't mean that we're not looking. We are always constantly looking but we've got such strict financial criteria that very few ideas have fallen through the [ sofa ]. The [indiscernible] one is the one I think everybody will remember, and I think we did look at in-market consolidation in South Africa. So I mean, the team is busy. But the financial criteria creates a very tough hurdle for ideas to pass through that will ultimately bring to the purview of investors.

Thanks Ralph. Another question on SA. And what was the impact on SA margins? And how do you see this unfolding going forward? Of load shedding on the SA margin?

Yes. I mean I think as we've previously communicated, I mean, it's close to about 1 percentage point. And I think as we obviously improve the network resilience. And we've seen the improvement in Q3, we should be able to meet our guidance that we've given to the market. So over time, we should be able to improve that going forward.

So a couple of more questions on Nigeria. First one, are you -- in terms of the pricing optimization that you're seeing in the new plans, are you seeing similar level of activity from your competitors in Nigeria? That's the first question. The second one, is there anything changing in terms of U.S. dollar availability in Nigeria? And when do you expect this improvement?

Is that a question for me or Tsholo?

So first one probably for you. Second one, probably for Tsholo.

Okay. So I understand the U.S. dollar availability in Nigeria.

Oh, okay. yes. I mean I think from what we understand, there has been some a bit of movement, particularly to the relationship banks. So we're starting to see some movement there. I think with regards to the local banks, I don't think they have seen any specific allocation from the CBN yet. But obviously, we will see how that pans out over the next few quarters. From our perspective, we have not seen any allocation to MTN Nigeria specifically. But we're starting to see some movement to specific international brands to [indiscernible] but very minimal at this point.

Yes. Look, I mean the -- we're all up in Abuja next week for Capital Markets Day. But the news flow coming out in the last couple of days has been that Central Bank operations and allocating have started. So that's positive. And so at this point, I mean we haven't yet -- this is all a week old. But you can well imagine that we will be in the queue of foreigners with demands for ForEx so called ZAR 7 billion backlog. I mean, our numbers would probably be beat there. So we'll stand behind the queue there. So that's a positive development that this can be sustained. On the new plans, yes, as I mentioned, the last couple of weeks, we've launched new data plans in Nigeria. These have -- they should improve the yields as we get into Q4, come out of Q1. We've launched about [indiscernible] new plans. Yes, so the next couple of months should show whether these are improving the effective rate per gigabyte. So that's -- this should all be positive, but we're still pushing for that kind of base [ tariff link ]. So this has only been on data, no new plans on voice. As many of you would know, voice data just exceeded voice in total volume of revenue in Nigeria in August. So this is a material development, but it's too early to call out fully what the yield will get out of that, but these plans are being sold and being sold for the last 4 weeks in Nigeria.

Thanks, the last -- 2 or 3 questions. First one is -- needs a clarity point. At what stage might you provide in full for the potential Nigerian [indiscernible] amounts? What should we be looking out for? That's question number one. Question number two on SA. With the sunsetting of 2G and 3G set to happen over the next few years, what progress has MTN made in shutting down these technologies? And then question number three, any plans to relook at Telkom.

So in terms of the provision for the -- for the debt, we will be providing in Q4 because, obviously, we have received a judgment. So it is a prudent thing to do that we are expected to obviously do a provision. But as we indicated, we are lodging an appeal in this regard.

Yes. Thanks, Tsholo. Just on SA. Look, we've -- I mean there's a structural trend across the world to move to more 4G, 5G upwards. I think in Africa, we'll have to have 2G, 4G plus. So 2G needs to be. So we'll be able to reform the current frequencies we have on 3G over time and create efficiencies. I mean the big thing is -- keep saying this to Charles, that we should stop selling completely 2G handsets. I mean if we should really have the government plan down on 2G handsets. So that for now, there should really be incentives to drive adoption in the use 4G plus. So I mean, we've got a lot of preparatory work, work with the timelines that the government has indicated around the shutdown. And to the point, I mean, medium term, this should have quite a lot of efficiency for the networks. 3G is a very inefficient technology, particularly from a power point of view. So anything that takes away, takes us from there, obviously, creates off a bunch of efficiencies, 2G, 4G ,5G plus, I think, is the configuration that we see on network 5 years out. Yes, on Telkom, there are no -- there's nothing to report. On what we previously spoke about in terms of our engagements with Telkom, nothing at this stage.

Thank you very much. I think that wraps up the call. I don't know if you've got any final remarks Ralph before we end the call.

Yes. Thanks so much for joining Tsholo and I on the call today, and I know it takes probably a day or so to read through our sense and get a bit of a picture of what's happening and what the outlook looks like. Any further questions you have please pass them on to Thato. For the investors who have planned to go to Abuja, we look forward to seeing you from Tuesday onwards next week, where Karl and the team will put on their best foot forward. I think they'll basically cover the investment case, while we still believe the investment case is strong given the nascent demand for both data and FinTech services, they'll cover that. I think they will cover in more detail this margin outlook for the year, which then helps you frame what you should anticipate as the margin development in a much more -- on a 2024 viewpoint. As we said, we would come back with our full year results of Nigeria next year. So I anticipate that to happen in January, end of Jan, where we give the guidance. I think what's important in the guidance is given where inflation is today, and where exchange rates are, we have a view that the market over the medium term should generate service revenue above inflation. I think as we said, we would look to update the market in both service revenue and EBITDA margin outlook over the medium term. So the team will give you enough to start thinking through that, although they'll only reveal that in Jan. I think another important point, which when we look at the broker notes and commentary, I think it will be important for the team to talk through in the way that we adopted IFRS 16, we took a hybrid methodology basis where some of the FX comes above EBITDA and below EBITDA. So there have been a lot of questions about -- why is our P&L more sensitive than other P&Ls. And I think [indiscernible] and team will do a good job to explain that to you guys in Abuja next week. And we did do a bit of a teach-in when I was group CFO many moons ago, but I think it will be good to just dust that up a little bit, particularly around how one looks at that. So much is happening below EBITDA. I think one has to look at EBITDA and PAT at the same time to just understand the economics of the business. But all that and more next week in Abuja. Look forward to seeing many of you if not physically dialing into the call. Thanks so much.

Thank you. That ends the call.