MTN South Africa’s voice problem is getting worse
MTN Group’s trading statement for the half year to June contains one sentence that deserves more attention than the headline earnings numbers. The South…
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MTN Group’s trading statement for the half year to June contains one sentence that deserves more attention than the headline earnings numbers. The South African prepaid market, it said, “continued to be tough in Q2 2026, specifically on voice service revenue trends”.
This will mark the fourth consecutive reporting period in which MTN has disclosed falling voice revenue in its home market, and the rate of decline has increased at every one.
In the third quarter of 2025, MTN South Africa’s voice revenue fell 2.8%. In the fourth quarter it fell 8%, closing out a full year down 4.2%. In the first quarter of 2026 it fell 9.6%. The second quarter, on the company’s own account, was tough again.
Prepaid accounts for roughly 52% of MTN South Africa’s service revenue. The unit’s prepaid subscriber base shrank 0.7% to 29.7 million over 2025 while consumer prepaid service revenue fell 2.3%, with the contraction reaching 3.9% in the fourth quarter. Service revenue for the year grew 2% to R44.03-billion; earnings before interest, tax, depreciation and amortisation (Ebitda, a measure of operational profit) fell 10.2% to R17.67-billion.
The margin is the clearest signal. MTN South Africa reported first-quarter Ebitda down 12.5% at a margin of 32.6%, down 4.1 percentage points year on year. The company’s own medium-term guidance for the unit is a margin of 35-37%. It is currently running well below the bottom of its own target range.
What changed is not that Vodacom or Telkom started a price war. But what has happened is that a bank entered the market and does not need voice revenue at all. Capitec Connect reached 1.5 million active clients in the three months to the end of February and, in April, scrapped charges for calls between its own Sim cards entirely. In the year to February it carried 768 million voice minutes, up 150%.
Capitec generated R442-million in net income from Connect in the same year, more than double the prior year’s R193-million, while giving the calls away. It can do that because it is not selling minutes. It is selling a banking relationship, and connectivity is the thing that keeps the client inside it. Voice has become a retention feature.
An operator cannot answer that with a cheaper tariff, because there is no tariff below free, and because MTN’s prepaid voice revenue is a profit line rather than a customer acquisition cost.
Vodacom is exposed to the same segment, though its trend has been less severe. Prepaid mobile customer revenue fell 2.1% to R26.7-billion in the year to March, with the fourth-quarter decline moderating to 1.6% from 3.6% in the preceding three months. Its prepaid base grew 0.4% to 39.1 million. Vodacom Group CEO Shameel Joosub has warned repeatedly about the risk of the South African market fragmenting the way Spain’s did.
Read: Free calls, dead voice and Shameel Joosub’s Spanish ghost
Yet the operators are being paid for this disintermediation. Capitec Connect runs on Cell C’s wholesale network. In Cel…