Moody’s Affirms MTN’s Ba2 Rating with Stable Outlook

Moody’s Affirms MTN’s Ba2 Rating with Stable Outlook

Moody’s has affirmed MTN Group Limited’s (MTN) Ba2 long-term corporate family rating (CFR), Ba2-PD probability of default rating (PDR), and Aa1.za national scale long-term CFR, according to a latest rating note.

“We have also affirmed the Ba2 backed senior unsecured rating of the $500 million notes due 2026 issued by MTN (Mauritius) Investments Limited. The outlook on all entities remains stable”, the rating agency said in a note.     

Moody’s said the rating action reflects the expectation that MTN’s financial and operating performance will improve over 2025 and the company will maintain solid credit metrics on a consolidated basis.

As of 2024, consolidated Moody’s adjusted debt to earnings before interest, tax, depreciation, and amortisation (EBITDA) increased to 2.4x from 2.0x a year earlier, mainly driven by a decline of the Nigerian naira by 73% during 2024.

Moody’s analysts said they expect that in 2025, debt to EBITDA will improve again to around 2.0x, supported by more stability in the naira-dollar exchange rate since mid-2024, approved tariff increases in Nigeria, as well as renegotiated lease terms with telecom tower operator IHS that has reduced the element of dollar indexation on MTN’s leases in Nigeria.

At the holding company level, Moody’s adjusted debt to EBITDA  increased to 2.8x as of 2024, up from 2.7x a year earlier and from 2.0x in 2022.  The rating agency highlighted that this was mainly caused by reduced upstreaming of cash from Nigeria.

“We expect that for this year, MTN Nigeria Communications Plc will remain unable to upstream any significant amounts to the holding company due to its negative equity position”, Moody’s analysts said.

The rating note explained that holding company leverage will remain relatively close to Moody’s Ratings downward guidance of 3.0x during this time. “We expect, however, that operational improvements in Nigeria should allow MTN Nigeria to recover a positive equity position until the end of 2025.

“This should enable it over the next 12 to 18 months to restart dividend payments to the MTN group, which will reduce the holding company leverage ratio”, the rating note stated.

MTN’s ratings continue to reflect the company’s strong competitive position as the largest mobile telecom operator in Africa by revenue and subscribers, with number 1 or 2 positions in all of its 16 African markets, including South Africa and Nigeria. It also reflects strong long-term growth, underpinned by expanding mobile penetration and increasing data and mobile money usage in its less developed markets.

This includes good profitability, with Moody’s adjusted EBITDA margin generally in excess of 40%, and prudent financial policy that prioritizes reducing leverage and risk exposures of the holding company and adequate credit metrics as measured by consolidated debt to EBITDA of 2.4x as of 2024.

Moody’s said the ratings remain primarily constrained by political, social, economic, and regulatory risks from material exposure to South Africa and less mature and less predictable markets in Africa, especially Nigeria and Ghana.

This also includes the telecom group’s exposure to the depreciation of local currencies, especially the naira and the rand, through dollar-indexed tower leases and dollar-denominated debt at the holdco, although the company has been actively reducing the share of dollar debt.

The telecom group faces  currency convertibility risk, the rating note said, leading to uncertainty around the group’s ability to upstream dividends and management fees from high-risk jurisdictions, as experienced most recently in Nigeria in 2023-2024 and at times also in Ghana, Iran, and Sudan.

According to Moody’s, the stable outlook reflects MTN’s good track record at adhering to its conservative financial policies and our expectation that the company will maintain its solid credit metrics and adequate liquidity.

The stable outlook is also in line with the outlook on the rating of the Government of South Africa, which is the country MTN’s holding company derives most of its cash flow from, the rating note said. #Moody’s Affirms MTN’s Ba2 Rating with Stable Outlook IMF Cuts Global Economic Growth Forecast to 2.8%