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Empty and chief executive Officer Ralph Mupita joining us today. Ralph, thanks so much for being with us today. So I wanted to start with what you noted in the earnings report, which was macro headwinds that the company is dealing with, one of which pretty big headwind is currency volatility. I mean, how is the company thinking about protecting itself going forward from this because it's happening in a few different markets that you operate in.
Yeah, look, I mean our underlying performance from our point of view was very strong and resilient. You know, we look at, you know, how is the business actually developing in terms of subscriber growth, What is the traffic we're seeing in our network, What is the transaction values and volumes you see on the fintech platforms. Those have been
strong and very encouraging. And when we look at that kind of underlying performance, you know, pretty much across most of from it's kind of basically trending in line with expectations. The two main challenges that we faced in the period. One is the very sharp devaluation of the Naira. The Narra ended last year nine h seven versus the US dollar in this half is average fifteen hundred, so quite
a lot of volatility. But between Q two and even up to now, the NARRA has been actually fairly stable and on a more recent forecast via Standard Bank Group Securities forecasts, you know, the pressure on the narrow is is projected to abate somewhat as inflation. Expectations are that inflation in Nigeria should start to come down and that rate tightening cycle in Nigeria will remain and therefore take
pressure off the NARRAW you know, going forward. So you know, if you exclude the narrow impact in particular, actually were a very decent top line growth would have had a decent set of earnings growth off. So the underlying business remains strong, and you know, we see growth as our best way to protect kind of the earning stream over the next the medium term to kind of restore positive earnings growth, you know, for the whole business. But the main issue has been the NIROD evaluation.
Yeah, and in particular with that, Ralph, I mean that Nigeria accounts for nearly a third of the company's earning. So are there things that you're thinking about doing as you sort of a wait for the volatility to debate.
Look coming on the volatility side, I think it's much more near a term, so it's not medium to long term. As I mentioned, you know, inflation cycle is anticipated to kind of peak in Q three, maybe a little bit into Q four and start trending down. If I use standard bank forecasts on inflation, Nigeria should be somewhere like in the early twenties from the kind of early thirties. So that moderation, you know, should also relieve some cost pressure in the next couple of quarters. But the underlying
growth in Nigeria is very healthy. The one big issue we remain focused on is really around you know, some teriff increase relief that will need expensive been growing you know, quite sharply, so we've been engaged with authorities around a tarraff increase, which we should then support the restoration and growth of earnings. But beyond Nigeria, in South Africa, you know,
we had a decent set of results. Our service revenue was up three point three that's a business that we think has the potential to go four to six percent, you know, given the capex that we've put into that business. So South Africa can step up a bit more in the near term in terms of its own top line growth and its earnings contribution. The rest of the portfolio,
Garna has been growing actually very very strongly. Uh in Ghana you know, continues to grow you know, both data and fintech businesses in a well all above you know, forty percents on those bearers. So there's a portfolio effect of the other markets that can also grow. And the fintech business in the period grew very strongly twenty seven percent service revenue growth, the EBIDA margin growth, the EBIDA margin delivered by that business has also been very very strong.
So when you look at the portfolio, I think you'll see different parts of the portfolio, you know, contributing to the overall group results. And as I said, in Nigeria, they still pent up demand and growth that we see for both the core connectivity business and our fintech business.
Right Ralph, just sticking on the other parts of their portfolio. Also in Iran, on on the earnings report, you noted the uncertainty around what is happening in Iran, especially with with sanctions from other countries. I mean, are there plans to adjust or speak with authorities there. How is that affecting the rest of the group.
No Iran, We've continued to manage Iran in the same way over the last five years, since the years sanctions came in. We haven't been able to get you know, any of the dividends in that market out. You know, obviously the Swift financial system is not open to Iran you know flows, so you know, the accumulated dividends that we are on lending the company in Iran is about three billion, So we don't anticipate to see any upstreaming,
you know, coming out of Iran. But what we reported was that the earnings grew thereby you know, over eighty percent, and that's a very healthy clip for earnings growth in Iran.
Are there markets, Ralph that you're potentially considering exiting MTN is considering exiting. I mean, we talked about around potentially the challenges that are there, but there's also been some challenges with Sudan as well, and that's another geopolitical story that's having an effect on the company. Are you thinking about potentially exiting either of those markets?
So the market we've announced we've done the exit on it is Afghanistan. So we've completed the exit of Afghanistan in February and now we've done Guinea Bissal So Guinea Bissa is done, so what we're working with. We have an offer from tellusl to acquire Guinea Conacrey. So those are the markets where we have exit plans in execution. So that is challenging for sure. The ongoing conflict makes it very difficult for us to be able to provide
consistent connectivity. Some sites do come down as a consequence of the conflict there. You know, we continue to best we can to keep that network up, so we are putting you know, more sites back on air to enable connectivity. There's been a massive dispersion of the population of Sudan and it is really you know, tragic what's actually happening there. You know, kids nineteen million children not going to school since April of last year. So, I mean, these effects
are very profound. So in Sudan we're continuing to manage best we can. We've have had the impacts, you know, the impayment we took and also the impact we've seen on growth. But you know, the exit plans as formally communicated, the only other market we're looking at right now is getting.
Conacree okay, okay, So no plans in the near term for Sudan at this point, no plans, Okay, no plans, Ralph. Before we let you go, I wanted to know what you envision the business looking like in the next few years. Obviously there's a lot of macro headwinds that you can't anticip paid how it's going to affect the business. But how are you how are you thinking about it and your growth strategy over the next few years.
Yeah, we believe that in the market that empty and operates in, we've got two main engines of growth that are structural because of pent up demand. The one is data. I mean now we have about sixty percent odd of our customers are using smartphones, means the balance is still using two G capable phones, so the growth rate in a data adoption remains very strong. So we see that
as fueling growth. On the fintech side, many Africans are excluded from you know, financial services as we know it, and we've been building a platform there of you know, more modern services including remittance, bank tech payments, and e commerce, and that's actually fueling growth as I said, the growth rates that we see there on these advanced services has
been about fifty eight percent growth in the period. So those two in particular going to fuel growth, and we anticipate that in going forward you'll still see growth driven by data and fintech. I think what you're going to see more and more is you know, you know, carving out the infrastructure, particularly around fiber, and you know, creating an opportunity of co investment with third parties to accelerate you know, investment in infrastructure. We're not using our own
balance sheet. We're going to focus on partner capital there as well. But I think the three drivers of growth will be the connectivity business driven by data, the fintech business. As we move into more advanced services, and infrastructure in particular fiber and data centers and there you're going to need partnerships, you know, to be able to create these also open access platforms and also leverage our partner capital.
There's no space now balance sheet to fund all that growth, but we can see the opportunity with a much more partnership model. That's how we see the business going forward.
Does that sort of speak to as well to the IHS partnership with with MTN. I mean, is that sort of getting past the previous issues that the two companies had. Is that part of the future growth strategy that you're thinking of.
No, the way we think about infrastructure, you know, you know, many companies look at a telco infrastructure and they you know, have the tower co, the fiber and the data centers as you know, different verticals. We've sold most of our towers already and they're all sitting in our investment in HHS with a twenty six percent shareholding. So in the way we think about infrastructure, you know, there's no tower companies there. It's mostly on the fiber and the data
center side. I mean, so what we are focused on is, you know, how do we get you know, to see value being truly reflected in the IHS share price. We think the market undervalues that business, but I mean it's for the management team there to demonstrate by execution the business remains fundamentally undervalued. So at these current share prices, you know, for us, you know, we're not looking to
sell out of IHS. You know, at the current share price, we think the business is more valuable than this, and you know, the governance issues that we've had in the past. As we communicated last week, we're looking to amicably resolve them, particularly now that the major contract renegotiations in Nigeria and particularly have now been closed. That's been a successful set of discussions, and so we'll move into discussing the governance
issues over the next while ahead. You know, myself and Sam Darwish we'll be talking around those and you know, will take proposals to our respective boards in due course.
Are you expecting the market then to value the company at sort of somewhat closer to what you're expecting or do you think this might continue a little bit longer.
Look, it's difficult to say. I mean, there are you know, I think part of the impact on the ch share price is also the uncertainty or what the market may see as uncertainty around Nigeria. Can you get currency, can you get hard currency? Whereas the narrare going to find its level. So I think there are some uncertainties that you will see into the CH share price, which you see similarly into the MT and group. I think also you know, is you know has got you know, has
got a particular debt profile and maturity profile. I guess the market is looking at that. But I think the governance concerns, if they are addressed amicably, I think will take, you know, quite a bit of uncertainty about the long term prospects of the company. So I think the market, you know, we'll see a conclusion on governance issues very favorably, you know, uh, you know particularly uh you know that these are it will be agreed between ih s UH and the mt and Group.
Ralph Mapita, mt N Chief executive Officer, I really appreciate your time today, Ralph