Good afternoon to everybody, welcome to MTN Group's Interim Results for 2023. My name is Thato Motlanthe, welcome to the Innovation Centre for those in the room, and everybody who's joined us on the various platforms, on our YouTube channel, on the webcast, as well as on Business Day TV. A special warm welcome to all the MTNers, who obviously do all the hard work that we're able to present today. Let's just start off the day as we usually do in terms of some of the housekeeping that we have. The first one is that you'll see that the usual disclaimer and safe harbor statement that's on the screen, that really just covers the presentation for the day. Secondly, as we usually do, we've got the emergency exits in case there is one.
There's one on my right, and there's one towards the back of the auditorium. Finally, if you haven't had a chance to log on yet, we've got Wi-Fi details on the screen at Y'ello Events, with the password that you should be seeing on the screen. Now if I just turn into the first half has been characterized by challenges. I think it's a mantra for ourselves as a company, but I think for companies worldwide. I think what it says, it says about us in terms of a company, and where we are, it, it's a demonstration of the resilience, the adaptability, the innovation with which we take on these challenges.
Particularly the people, as I said, who, who kind of do the hard work for us to be able to present the results today. Hopefully, you'll be able to see some of that work as, as Ralph and Tsholo present this afternoon, come through in the presentation. I think if I just run you through the order of the day, it will be the usual running order. Ralph, our Group President and CEO, Ralph Mupita, will come up. He'll give you. He'll start off with a few highlights and then get into some operational and strategic overview. Tsholofelo Molefe, who's our Group CFO, will then come up and do a financial summary. Then Ralph will come up to just do some closing comments and conclusions.
At the end of it, we'll have our usual Q&A. Just to remind you, those of you who are logged on to the webcast, please use the platform to send in your questions. I think finally, in terms of housekeeping, again, for those of you who are tweeting during the session, or is it X-ing these days? The hashtag is on the screen. It's #MTNInterims23. Those who are following our X handle, it's @MTNGroup. Finally, for those of you in the room, once we are done with the presentation, you're welcome to join us for refreshments afterwards. With that, let me welcome our Group President and CEO, Ralph Mupita. Thank you.
Thato, thanks very much, and extending my own welcome to everybody who's joined us here on 14th Avenue, and all of those stakeholders and shareholders who are joining us on virtual platforms. We appreciate you taking the time to listen to the results delivery from Tsholo and myself. Also, extending a warm welcome to all the MTNers across our markets, 19 markets, 17,000 MTNers, who worked hard in the first half of the year to deliver the results that Tsholo and I have the pleasure to share with you. You would have probably now gone through the extensive SENS documentation that was released on the JSE earlier today.
What Tsholo and I will try and do is to provide what we see as salient items in what was a very, very busy half of the year, and as Thato has mentioned, had quite a lot of challenges that we needed to navigate to deliver the performance that we've achieved in the period under review. If I start off by looking at the macro factors that affected the operating conditions, there are broadly five factors. Firstly, inflation. We experienced elevated inflation in pretty much most of our markets. Forex volatility was a character to our financial results, as was cash availability in a market like Nigeria. We also had to navigate regulatory developments, SIM registration, deal with tariff increases and tax matters across a few markets.
Obviously, running a network, energy, power, and tower co contracts are critical parts of how we try and deliver the financial results. The final issue that we had to confront was the conflict that emerged in Sudan in the middle of April, and we'll cover how we've progressed, you know, in that regard. Just picking up on some of the key issues that you'll see a little bit later reflected in Tsholo's financial results. From a Forex volatility, call-outs on two main currencies are two major currencies. We did see a ZAR depreciate against the dollar in the first half. More movement between the ZAR and the dollar than we've experienced in recent reporting periods. In Nigeria, we faced two dynamics.
Firstly, there was the Naira redesign that happened at the end of last year, which caused a cash crunch, or lack of cash notes being available in the market, particularly in Q1, but we had some of that effect into the early parts of Q2. Finally was the Naira, Naira, liberalization of exchange rates, you know, moving the exchange rates all to the I&E window, in mid-June. The effects of those, you know, resulted in revaluation losses that you'll have seen in the P&L for MTN Nigeria, as well as now that you see full group. On the regulatory side, I'll cover a couple, obviously, with SIM registration issues that we had to deal with in Ghana, but also the new SIM registrations in Nigeria.
Tax matters, you know, navigating the tax matters, particularly the one that you would be aware of, which was the GRA matter in Ghana. Overall, a challenging operating environment, but we feel that we've made good progress in the period within that context. From a strategy perspective, you know, how did we see how we fared in the half under review? A couple of key call-outs. Commercially, we are very encouraged by the commercial performance of the business, growing the base of subscribers now to just under 292 million subscribers. 140 million of those are data-active subscribers, so just shy of 50% of data-active subscribers within our base. In the two main drivers of revenue growth, data and Fintech, we saw very good, you know, growth.
If you look at data traffic, ex the JVs, 'cause we did see a slowdown in Irancell, we saw data traffic growing in aggregate at 35%. Then when you look at the mobile money platforms and you measure it in terms of the transaction volumes, those were growing at 37%. Transaction value actually growing at close on to 62% in dollar terms. Commercially, very encouraged by the results that we saw. The financial resilience of the company has remained very strong. On a group, net debt- to- EBITDA, and Tsholo will take us through the numbers, with sitting at 0.4x against our covenants limit of 2.5, well covered from a leverage. We did see the holdco leverage going up in the period.
The last reported holdco leverage number was 0.8 x. Now you see 1.5 x, and that's really a function of us taking the scrip dividends in Nigeria, and also the inability to access foreign currency in Nigeria. The liquidity position of the company remains strong, both cash and available facilities to the company, and again, Tsholo will cover all of that. We did announce at the Capital Markets Day that as part of our ongoing efficiency drive, we would be pursuing a further ZAR 1.5 billion of expense efficiencies. We've achieved ZAR 0.7 billion of that, so well on track. Then on strategic execution, three main call-outs, and I'll talk to them a little bit later.
Firstly, making progress in terms of the strategic partnerships for Group Fintech business. We've signed and concluded commercial agreements, and I'll come back to that, you know, with Mastercard, and then we have signed a transaction MOU, which I'll give a little bit of detail later in my presentation. We've made good progress also now in the orderly exit of Afghanistan. We received conditional approval from the ATRA, which is the regulator, and now we just need to submit the necessary documentation. Feel pretty encouraged by the progress we've made there, and hope that by the end of Q3, that all the conditions will have been met.
On the localization front, continuing with our localization efforts, you know, some of the localization progress in Ghana in particular, would have been lost out because of the scrip dividend we took there. We did, you know, have some localization proceeds coming through from Ghana, and Tsholo will cover that. Finally, in the area of creating shared value, continuing to make progress, the cost to communicate on a blended basis has come down across the portfolio by almost 22% relative to prior year. On broadband coverage, making good strides towards getting to 90% broadband coverage across our markets. Pretty much our markets coverage is becoming less of an issue. It's much more usage is the issue across our markets.
On D&I, this will be a, you know, a work in progress for some time to come, but we do feel encouraged by the 40% women representation in the workforce. You know, we're seeing also good progress in subsets of women in tech. That's well above 20% now. We started that in the mid-teens, maybe 2 years ago. Again, the D&I showing good progress in the Women's Month of South Africa. I think we'll be told by the women at MTN we can still do a lot more, and I would agree with that. If we look at the financial highlights, I'll just cover a few of the key points, and Tsholo will cover this in detail.
Service revenue growth of 15.1%, well within our medium-term guidance, we've been very encouraged. Inflation pressures have been creating OpEx, you know, challenges for us, you'll have seen the EBITDA margin on a constant currency basis, actually down 0.5%. Encouragingly, though, headline earnings per share, or clean HEPS, operational HEPS, if you'd like to call it that, we saw that at ZAR 7.49 per share, that's just shy of being 25% up on the prior period. On capitalization, we put in ZAR 17 billion of CapEx, well within our guidance of, you know, 15%-18% CapEx intensity and operating free cash flow, you know, up just under 17%.
The ROE in the half was a pleasing 24.5%. You know that our guidance target is, you know, 25% and above. Tsholo will cover all those financial effects a little bit later, and let me cover some of the operational and strategic updates. Starting with South Africa, we were very encouraged by the performance of MTN South Africa in Q2. We did say, with our full year results in March, that H1 was going to be a very challenging period for MTN, you know, given load shedding in particular, and the plans that we would, the self-help plans that we would have towards making us resilient under Stage 6 + conditions, and we would need to upgrade our sites and also upgrade the security that we have.
I'd like to make a call-out to Charles and his team for the very good work that they've done in the period to really improve network availability, you know, across the portfolio. At the end of June, we had network availability just at 91%. The sites that we had upgraded, both for power resilience and security, those were actually operating at our expected levels of network availability, which is 99%. The plan that Charles has is working and is actually slightly ahead of our plan. We're envisaging that we'll need to spend between ZAR 4 billion-ZAR 5 billion of network resilience investment between the start of this year all the way to Q1 next year. Charles is in the room, so he can take, you know, many of your questions there.
Q2, we saw improving service revenue development, pretty much in line with what we had expected. We saw 2.5% service revenue growth in Q2 versus Q1, where we had 1.3%. The data traffic trends that we see in Q1 versus Q2 have been encouraging. Where we saw pressure in the business is really around prepaid. When we look at consumer postpaid, and when we look at wholesale and enterprise, you know, very much, you know, steady progress there. You know, prepaid, both the voice side as well as data, you know, remained under pressure. We did have some price ups on prepaid inflow, at the end of May, and we'll start to see some of those effects coming through.
So as we look at the early parts of Q3, the early parts of Q3 that I can talk to is actually the July, we're encouraged by the trends that we're starting to see, you know. To Charles and the team, you know, the focus has really been on ensuring that we have resilience at Stage 6 + in terms of meeting our own desired levels of network availability. Moving on to Nigeria. Nigeria released results two weeks ago. Karl would have taken you through. A couple of call-outs on the results of Nigeria. Very strong operational results, where we met our service revenue, as well as our medium-term guidance on margins. The key call-outs in Nigeria were twofold.
As I mentioned, the cash crunch did affect our performance in pretty much most of Q1, and I think you'll have seen other companies report in Nigeria around the cash crunch, and a little bit into Q2, and I think we're beginning to hurdle the cash crunch effect. The second has been the devaluation of the naira in June. That's obviously caused some short-term pain, and you see some of that in the P&L. The real pressure of that devaluation we'll see into the second half of the year, and I'll comment a little bit about that in our outlook. We've been very encouraged with the 4G and 5G expansion. We put in quite a bit of CapEx, so ZAR 6.3 billion equivalent of CapEx that we've put in.
We're seeing, you know, good results when we see the level of data traffic at over 45%, you know, good growth there. On the PSB, we're a little bit, you know, behind our plans, and obviously, the cash crunch did affect the growth of wallets. We did take a deliberate decision to pull back on OTC, and that obviously reduced the total mobile money subscribers that we have. That was a conscious decision, which is to put our investment in, in wallet development. Again, on the outlook, I'll provide some comments there. A set of very good results from Karl and the team in Nigeria, and encouraged by the progress that we're seeing there.
For the rest of the portfolio, you know, SEA, WECA, and MENA, which is, you know, covered under the markets umbrella, again, very good growth. You know, top-line growth for data revenue in all the markets above 20%. In SEA, you know, really good growth that we saw both on the GSM as well as on the Fintech side in Uganda. In Rwanda, now we have our 4G license. I think we're feeling encouraged that we should see, you know, margin repairs, as we were previously, you know, having to lease out the capacity from the, the, the, the open access network that was providing 4G, and now we have our own frequencies and our license, and we should see good growth there.
Again, SEA is pretty much the poster child in our business of the proportion of Fintech service revenue that can come out of our customer base. We are seeing there 27% of Fintech as a contribution to service revenue. On WECA, again, a call-out, broad-based growth. Ghana, notwithstanding the challenges that it has under SMP regulation, as well as the heightened inflation levels, we saw very good growth there, voice data, as well as the Fintech. The Fintech business in Ghana was hurdling the introduction of the E-Levy in May of last year. Many of you remember there was a 1.5% E-Levy that really brought activity down, but we've managed to hurdle that, and that E-Levy has been reduced, you know, now to 1%.
Good growth also in Côte d'Ivoire and Cameroon. On MENA, two main points to call out. You know, firstly, is obviously that the Sudan conflict has created, you know, service revenue deceleration in Q2. The conflict started in the middle of the middle of April. We had to start bringing sites back on air, and we're very pleased that we brought pretty much most of the sites back on air as we exited H1. At that, obviously, we saw a deceleration in service revenue, you know, during that period, and obviously, you know, our, our thoughts and prayers go to all of our staff, some of them who are actually now working remotely from Egypt and.
United Arab Emirates, as, as we try to navigate operating our business within that war context. Irancell, I would point out that we've seen, you know, very good earnings, you know, coming out of that business. There was the traffic growth was impacted by the internet disruptions for international traffic. The team were able to manage in that context, managing expenses and delivering decent EBITDA margin in the period. Snap, as usual, we give a little bit of a soundbite on Snap. Snap is the Uber of the Middle East, where we own an effective 44%, either directly or through MTN Irancell. They're seeing very good growth on ride hailing, 4.3 million rides a day in Iran.
The food business is growing strong, and they've just launched a payments business. You know, again, very good, encouraging growth there. Just looking at the Fintech ecosystem, what gives us confidence that, you know, this platform will continue to be, you know, part of the growth that we see, you know, over the medium to longer term. The system remains strongly intact, very good volume growth and transaction value underpinned by usage, agents, and actually merchants. On the usage wave, we're looking at monthly active users were flat during the period. Two dynamics gave us a flat result at that level.
One is obviously the Nigeria dynamic that I mentioned. The second was the cleanup of the base in Côte d'Ivoire, where we've, you know, cleaned up some of the OTC customers as we're just focusing now on pure wallets that took out about 2 million in the base. If you normalize for Nigeria and Côte d'Ivoire, the base was actually up 15%. 15% as you, as you look at how the, the revenue grew at just over 21%. We feel that the ecosystem remains intact. We have the remittance corridors that we would like, but obviously are looking to expand and grow, that we see that as a, as, as a big opportunity.
Just on the Fintech side, maybe to give a little bit of color on the strategic partnership with Mastercard, which was announced today, and maybe to talk through a couple of the aspects. Just to remind the audience and shareholders that we did announce in the second half of last year that we're running a bespoke process for seeking some minority investment, but a minority investment that's anchored by a strong commercial relationship. The commercial relationship, you know, is obviously the most important for us because it allows us to grow and accelerate the verticals that we have in our business. We ran that process, you know, and we ran two parallel processes since pretty much quarter four last year, all the way into H1.
The one process was really around, you know, looking at what are the commercial objectives that we need, and which partners would be able to accelerate specific verticals. We'd always made a call out that payments and remittance as key growth areas over the medium to longer term. BankTech is obviously another big vertical, but payments and remittance were two areas. So we've, we've run-- we ran a process of ensuring that we can get the best possible commercial agreements. As you can see on the chart, there are three elements to the commercial agreements within payments and remittance. One was on issuance, second was on acceptance, and the third was really around building a broader remittance capability.
Serigne is in the room, for those of you who have questions, you know, we'll, we'll come and talk to that. That was the one area that we looked at. On the minority investment, we ran a process where we had, four international, let's say, financial services companies, so to speak. And, and through that process, we had, bids for minority investment. The ZAR 5.2 billion that you see is actually the midpoint, you know, of the bids that we would have seen, and that was a reference of the, FY 2022 , EBITDA. It has been adjusted, for, costs, kind of intercompany costs. As I said on the call earlier, the 420, that would have been a reported EBITDA, in $420 billion.
You know, we had about ZAR 60 million of costs. You can work your for those who are looking to try and infer multiples, I think I've given you enough information to figure out how you should think about the EBITDA on a standalone basis versus also the multiple to deliver that. That's. This has been a process of trying to figure out what is the value of the company, you know, through a very bespoke process where we had several bids, and this, you can think of it as kind of in the median of. That was pretty much locked down at the end of the half, and we went through a DD process, customary DD process, which has been concluded. We've announced two things.
One is the commercial agreements have been signed, so we're into the execution mode. The second is that we have a transaction MOU, you know, which is subject to kind of completing processes. You can well imagine that until we've completed that, we don't want to announce the investment amount. I know some of you, you know, would want to know what that is, but, you know, between ourselves and Mastercard, we said we wouldn't make that announcement. Once completion has been done, I think, you know, all the transaction details will be made. The final thing I'll say on this slide is that we still remain committed that, subject to market conditions and appropriate valuation, we would be prepared to sell a minority stake of up to 30%.
We don't have to get to the 30%, but that's something that we're open to, but again, subject to market conditions at, and, and valuation. This is something that, you know, we will continue exploring, both for strategic partners and financial investment over time. Just coming back to the asset realization program, which has got, you know, many components to it, and you'll be well familiar with this chart that's in front of you. Let me start with TowerCo investments. We did call out at the Capital Markets Day that we do not believe that at current valuations, over the near to medium term, that we will be able to see a sell-down that's value accretive for IHS.
We basically have taken the for sale sign for IHS off, and we're looking at IHS actually with a much more longer-term strategic lens than we would have done in the past. You can see that you used to see in the future focus box of TowerCo investment, there's no longer IHS. We think that we'll be able to de-lever the holdco balance sheet. For those of you who won't remember, when we started the ARP, the ARP was started on the basis that these sell-downs would enable us to de-leverage the holdco balance sheet, particularly the euro bonds at that stage, 2022, 2024, and 2026 euro bonds. We have, you know, done, you know, quite a lot of work around the 2022 bonds.
These are obviously all gone. We do feel that we, we do not need to sell our IHS stake to be able to do the last part of liability management on the 2024 and 2026 bonds. You'll see IHS has been taken out, and, you know, is the for sale sign, you know, over the near to medium term is not in place. On localizations, a couple of key messages. We're gonna continue with our localizations, and obviously, these are all subject to market conditions being available. Nigeria, as you know, we still have 11% of what we committed, and obviously, would only do that once we start to see FX being available, and there's an ease for us to sell down and to be able to start doing tranches of that 11%.
Ghana is still in play, and, you know, Uganda and Cameroon are probably two new announcements. Uganda, we're, we're looking towards getting to our 20%, you know, localization. We got to 13% last time, and we're pushing the last 7%. In Cameroon, we always had an agreement that at some point in time, beyond the 20%, that's held by Broadband as our partner there, we would be looking to sell, and obviously, market conditions being conducive is a really important, you know, decision point for us to sell down in Cameroon. Finally, on portfolio transformation, a couple of key messages. One is we continue to evaluate the possibility of exiting some of our smaller markets. That is work that's ongoing and hasn't been concluded.
The second is, you know, obviously, we made good progress on Afghanistan. The final point I would make is really around Irancell. In Irancell, we are looking at a IPO to meet regulatory requirements for localizations there. The angle we are going with the rest of the shareholders at MTN Irancell, is looking for a primary issuance of about 7%-10%, you know, in the course of the second half of this year. Obviously, that's a process that, as it develops, we'll be coming to you to update you what, what all that means. We're not looking to sell, and hence, we're pushing for much more a primary issuance, so we would get diluted in that process.
Again, it might be a process that then reveals the inherent value of that investment, probably written down to zero in kind of our current share price there. Hopefully, that gives you a flavor on the ARP. In terms of our medium-term guidance, we remain encouraged by the performance, you know, South Africa, a tale of two halves, two quarters, actually, 1.3% in Q1, and then the 2.5% to give you the 1.9%. In pretty much the other areas of our performance stack in terms of medium-term guidance, we're fully encouraged by the progress that we're making. Let me pass on you to Tsholo to take us through the financials, and I'll come back to conclude with a look-ahead section. Thank you.
Thank you very much, Ralph. A very good afternoon to everyone joining us for these results this afternoon. I'm really pleased to present to you the group financial performance overview for the first half of the year. I will first cover the group income statement, the salient points, and then I'll cover the two major operations, being SA and Nigeria, and then come back to the group performance overall. I think, as Ralph indicated, you know, the, the, our results are characterized by a very challenging macroeconomic environment, where we've seen elevated inflation as well as Forex volatility.
We've been very pleased to see a robust set of performance with solid revenue growth, and this is really underpinned by, you know, the growth that we are seeing in Nigeria, Ghana, and various of our markets demonstrating a top-line growth that was very solid. We obviously have seen challenges in terms of operating expenses. Our reported earnings were also impacted as a result of the naira devaluation that we saw in the last month of June, and we'll take you through that. Just taking you through the group income statement, firstly, just the salient points, you will notice that we delivered a service revenue growth on a reported basis of 16.5%, with 15% in constant currency....
This was largely driven by the growth that we saw, mainly in Ghana and Nigeria, as I indicated, showing double-digit growth overall, and all our markets showing solid top-line growth, as I indicated. South Africa also performed very well, but, you know, had challenges with load-shedding impact, and I will unpack that in a later slide. If you look at our EBITDA, we delivered EBITDA before once off of 12% growth in, on a reported basis, and at almost 14% in constant currency year-on-year. However, we did see a marginal decline on margins due to the, you know, high, high costs that we saw, particularly on OpEx, due to the macro challenges that we saw.
We delivered 44% in terms of EBITDA margin, which was a 0.5% decline year-on-year. We also saw depreciation, amortization, and goodwill increasing by 12% on a reported basis and 8% in constant currency, and this was largely due to CapEx addition, with the acceleration of mainly 4G and 5G in Nigeria in the second quarter of the year, as well as a depreciation of SA tower assets, which were not depreciated last year as we had those assets still held for sale. You will notice that net finance cost has seen a significant increase at 47% year-on-year on a reported basis, to ZAR 12 billion.
Included in that ZAR 12 billion is Forex losses of about ZAR 4.6 billion, of which ZAR 4.4 billion of those related to the Nigeria devaluation. Included in that ZAR 4.4 billion was actually ZAR 3.2 billion, which related to the devaluation that took place from mid-June, following the liberalization of the foreign exchange rate in Nigeria. The result, as you can see, was a profit before tax, a decline of 1.4% year-on-year, as a result of those impacts. You will notice that income tax expense reduced year-on-year by 12.5%. This was largely due to lower cash upstreaming and therefore lower withholding tax, as well as lower profits overall.
We also saw a decline on our non-controlling interest, as you can see, a decline of about 18.5%. Attributable profit therefore increased by 14.9% overall. Earnings per share grew by 14.8%, but was impacted by non-operational items as well as impairments. You will notice that adjusted headline earnings per share grew by 25% overall, really adjusting for the non-operational items of about ZAR 2.07, and I will take you through that later on.
Then move on to the Group service revenue pillars, you will notice that data continues to be the main contributor of growth, adding ZAR 8 billion to the growth year-on-year, followed by voice, which still shows very healthy growth at ZAR 2.6 billion contribution to the growth, followed by Fintech at ZAR 1.8 billion, and then wholesale at ZAR 1.1 billion. This was largely, as I indicated, on voice side, we still see very healthy growth at 6%, largely due to Ghana and Nigeria, where we saw a pricing optimization. In the main, data grew by 23.6%, also largely due to pricing optimization.
Headline pricing as well in some, in, in some markets, contributed to that, to that increase. We also saw data traffic growth increasing by data traffic growth of 19%. If we adjust for Iran, data traffic growth was at about 36% overall. I'll take you through Fintech in a bit more detail going forward. On the wholesale side, we saw a 31% increase. This was largely due to national roaming deals, particularly in South Africa, from Cell C as well as Telkom. We recorded about ZAR 1.5 billion of revenue from Cell C and about ZAR 145 million from Telkom in this period.
We then move on to South Africa, I would like to just take you through South Africa in summary. As I indicated earlier, we continue to see resilient performance from South Africa under a very challenging macro economic environment, delivering service revenue of 1.9% year-on-year, with voice declining by 13%, and largely due to the general macroeconomic pressure facing consumers, as well as load-shedding impacts. Data grew by 8.4% at the back of about 24% of data traffic growth. As I indicated, there was also headline pricing that took place in South Africa.
You will also notice that, as I indicated, 31% growth in terms of wholesale to ZAR 2.5 billion overall. In terms of expenses, expenses grew higher than service revenue at 9%. Cost of sales was well managed, but we saw an increase due to device costs, device costs, as well as commission increases as they drive channel expansion.
We also had a significant increase on OpEx. This was largely due to rent and utilities that went up by almost 60% as a result of the load-shedding impacts, as we've indicated, with the challenges of high energy costs, electricity tariffs that went up by 18%, and also just security costs to obviously protect the network from vandalism overall. A total of about 9% in terms of cost with, you know, moderate service revenue. The result was a dilution of margins of about 3.6 percentage point to about 3.6%.
MTN South Africa spent about ZAR 4 billion in CapEx as they continue with their efforts to improve the network, also made investments in 3G and 4G with a capital intensity, excluding leases, of about 16%. Including leases, capital expenditure was around about ZAR 7.6 billion. If I move on to Nigeria in a bit, just in summary, you will have seen the results of Nigeria. On the 31st of July, I'll briefly just touch on those. You will see that service revenue grew by 21%, which was really in line with inflation, as well at 22%, as well as in line with medium-term guidance of at least at 20%. We continue to see good growth on voice and in Nigeria at 12%.
As I indicated, a lot of good work done in terms of pricing optimization through CVM initiatives. We saw data growing as well at about 14.34% to ZAR 17 billion. Really also due to, you know, a lot of effort being done in terms of pricing optimization and increased usage as well as they roll out the network, and due to increased coverage and capacity as well. We saw a good increase as well in terms of Fintech at 8% year-on-year to about ZAR 1.6 billion. Wholesale, which included ICT enterprise, ICT, as well as bulk SMS, went up by 33% to ZAR 1.8 billion.
When you look at expenses as well from Nigeria, you will notice that it grew by 23%, slightly above the growth of service revenue as well as inflation. This was really mainly due to a significant OpEx growth of about 27%. I think it's important to note, as we said, that our OpEx growth was mainly coming from network and utilities, where we saw the impact of CPI as well as FX devaluation impact, but also, you know, volume increase from a site rollout. Those were the main increases from an OpEx side. Cost of sales was well managed, within way below inflation and also below the service revenue growth.
It was pleasing to see that they were able to protect their margins with a slight decline at margins, ending at 53.1%. In terms of CapEx, CapEx intensity of 14.4% with a capital expenditure of ZAR 6.3 billion, excluding leases, this was also a function of, you know, additional accelerated CapEx in the second quarter of the year from 4G and 5G.
It is important, I should have mentioned, that when you look at your operating expenditure and as well as your EBITDA margin, the impact of the FX devaluation that took place in June, you will not see the impact of that, because the tower contracts are actually based on a rate adjustment relating to, you know, the previous quarter. You'll only see the impact coming in, more towards, firstly, in the third quarter, and then full on in the last quarter of the year on average. That is why you only see the impact at net, at net finance charges and not so much on the EBITDA side. If we move on to the next slide.
Just talking to Fintech, overall, a very good performance in Fintech, given that I think at year-end, we recorded about 14.7% increase. We've seen a 25% increase in the second quarter of this year, year-on-year, as a result, a 21.7% increase year-on-year. As you can see, the bulk of the increases, the bulk of the Fintech revenue is still from withdrawal services, as well as transfer services, which still makes up about 56% of the total revenue. Withdrawal services growing at 17% year-on-year, and then transfer services growing at about 33%. Pleasing to see how the advanced services continue to evolve, which is really an area that we are accelerating with an average of 67% growth on advanced services overall.
You will notice that even though, our BankTech and remittance, that Ralph was referring to, they are still nascent, but we're seeing quite significant growth. Over 100% of growth in BankTech, and remittance growing at 77%. Payment and e-commerce growing at about 55% year-on-year to ZAR 1.2 billion. You will notice that advanced services have now improved in terms of service revenue contribution to 18% from about 13.3% last year. I mean, Ralph has shared with you how the obviously this structural separation has, has, has continued, and we are very pleased that we also completed the intercompany agreements, and we are in the process of concluding our cost allocation.
At this stage, the current margin, after eliminating for intercompany, is sitting at 37.6% on a consolidated basis as at the 30th of June. If I then can move on to the group expenses, which were well managed under the circumstances, given a very, very tough economic environment. You will notice that we grew overall group expenses at 15.9%, with cost of sales well managed, and I've already shared with you some of the drivers of cost of sales. OpEx, as I indicated, 19% overall, the bulk of that coming from network and utilities.
Staff costs grew by 19% year-on-year, and part of the underlying reasons for increase in the staff cost was, firstly, additional resources that we had to allow for our Fintech and Bayobab business as we scale up those businesses, but also, some out-of-cycle in salary increases for markets that have high inflation, being Ghana, Nigeria, and South Sudan. As an example, we also saw an increase in terms of our IFRS 2 charts from a share-based perspective in terms of our PSP scheme as a result of the share price movement. Overall, 16% increase, and we continue with our expense efficiency program to be able to manage that moving forward. I've spoken about just the expense breakdown.
You will notice that our network and utilities make up 19% of the total cost. In fact, if you look at it just from where the actual costs come from under network and utilities, about the bulk of that was from Nigeria, which was about 2/3 of the growth, followed by South Africa, as I indicated earlier on. Going on to the next slide, I think it's important to say, how are we then, obviously, given the challenging macro with such high costs, being able to mitigate the significant impact and protect our margins as well as returns. Ongoing expense efficiencies, as we indicated at the Capital Markets Day, we gave ourselves a target of ZAR 1.5 billion in terms of expense efficiencies.
We've now delivered about ZAR 700 million of that. That obviously 33% of that came from Nigeria, with about 25 and 28% respectively, coming from SEA and WECA, followed by South Africa, contributing 12% of the balance. The bulk of that came from network and IT at 48%, general and admin expenses following at 38%, and then sales and distribution, as well as marketing at about 14%. I think it's important to also just look at the right-hand graphs.
As you will see, total cost as a percentage of revenue has actually increased from 54.7%- 56.4%, despite the ongoing, you know, focus on efficiencies. This is largely because of, you know, the challenging environment with high inflation, FX devaluation, higher fuel costs. For us, the expense efficiency program is actually an ongoing thing, because we need to make sure that we continue to sustain the business, given the challenges that we are facing. We embarked on a global cost benchmarking exercise, which is really what we call expense efficiency 2.0, because we did embark on one four years ago, where we delivered about ZAR 6.4 billion.
Out of this expense efficiency program, we have been looking at- we have been able to benchmark ourselves against global competitors and looking at what are the areas of efficiencies that we can look at in addition to that. We've identified, you know, approximately between ZAR 7 billion and ZAR 8 billion that we would like to deliver on over the next three years from about 2024. Really main focus, you know, at the bottom there, being on continuing with our network and IT program, shutdown of legacy ITs, network, review of operating and maintenance contracts. Renegotiation of contracts with our major vendors is a continuing initiative that we look at. Simplification of our processes and products, and making sure that, you know, we apply digital transformation to be a lot more efficient.
Staff cost optimization, as well as looking at, you know, efficient commission structures and distribution channels as well. If we move on to the next slide, I think important just to highlight just the performance of our earnings and what the analysis, as I indicated earlier. You will notice that our earnings per share grew by 14.8% to ZAR 5.11. It was impacted by impairment of goodwill and other assets, ZAR 0.13. The impairment loss on the remeasurement of Afghanistan, which is still classified as held for sale, ZAR 0.21. The result was basic earnings, headline earnings per share of ZAR 5.42, an increase of 7.1%.
You then, you know, adjust for, you know, hyperinflation and the impact of FX, ZAR 0.38 of hyperinflation and ZAR 1.69 of the Forex losses, we saw an increase on headline adjusted headline earnings of 24.8%, to ZAR 7.49. ZAR 1.69, or in that ZAR 1.69, about ZAR 1.28 of that came from the naira devaluation, of which ZAR 0.95 was really due to the naira devaluing from June following the unification of the exchange rates. I move on to the next slide, which is really our capex intensity.
I mean, I've touched on CapEx, and really, we've spent ZAR 17.2 billion as we continue to invest in faster-growing areas with a CapEx intensity of 15.2% for the year. The bulk of our CapEx, as you can see, went, came from Nigeria, followed by the WECA and SEA markets, as well as South Africa. About 2/3 of that was mainly from networks, followed by IT, at about a third of that. I think it's also important to be aware that our CapEx is very sensitive to Forex volatility. I think about 65%, 65%-70%, there or thereabout, of our CapEx is exposed to dollars, so we obviously have to look at it from that perspective.
On translation, we had a significant, we see a significant impact from an outlook perspective. We will continue to invest in, in, in, in South Africa's resilience program, and also sustaining the investments that we need to make in terms of 4G and 5G in markets where we are seeing growth. To that end, we have upgraded our guidance from ZAR 37 billion to ZAR 40 billion. Important to note that the bulk of that, about ZAR 3.7 billion, was really due to the weakening of the ZAR. We still target, however, capex intensity of about 15%-18% over the medium term. Moving on to our cash flow....
Very important, to show how we have been able to, you know, generate a strong cash flow over the period, with our operating free cash flow up 16% year-on-year, before the spectrum acquisition from Nigeria, Ghana, as well as Sudan. This, this was affected by acquisition of a capital expenditure as well as capitalized leases. We also saw some working capital pressure, specifically, with, largely coming from, you know, prepayments that we make. As we try to mitigate against Forex impact, we actually make advance payments to our suppliers, but we also saw some pressure from some of our retail enterprise and wholesale customers.
That had an impact on, on working capital, but we continue with our efforts in terms of cash release initiative to try and mitigate the pressure on working capital. When you look at our operating cash flow, however, after taking into account spectrum leases, you will notice that we saw an increase of 59%. This was also boosted by our free cash flow was then boosted by net financing activities of about ZAR 5.5 billion, the bulk of that being additional borrowings, mainly from Nigeria as well as Cameroon. We saw some outflows relating to net interest, taxes paid, as well as other as well as investment, which was really relating to restricted cash in Nigeria. Other really relates to cash balances for Afghanistan, which is held for sale.
You will see that our free cash flow before dividend and excluding the FX losses, what was at ZAR 7.5 billion overall. A slight decline relative to same period last year, but ZAR 7.5 billion positive free cash flow. Moving on to our leverage. If I can just move on to how we have managed to, you know, manage our balance sheet. Our balance sheet really remains very strong, and we continue with our efforts as well to explore liability management, as Ralph indicated earlier, trying to mitigate against the impacts of Forex on our Eurobonds. I think we saw an FX impact of about ZAR 1.7 billion during the period.
We issued a DMTN bonds this year of about ZAR 2 billion. Part of the reason was to make sure that we can spread and mitigate against refinancing, to mitigate against refinancing risk, but also spread the maturity profile, as we can see, to about 2030. We obviously hope that with the, you know, DMTN issuance, we're able to explore liability management so that we can obviously early settle the Eurobonds. It is work that is currently ongoing, and we'll communicate when, when we've been able to conclude on the work.
We upstreamed about ZAR 4.2 billion in terms of cash upstreaming from, from markets, ZAR 1.3 billion from South Africa, and other cash upstreaming came from markets like Ghana, Uganda, Cameroon, giving us about ZAR 4.2 billion. In addition to that, we were able to get cash proceeds from localization with about ZAR 1.2 billion from, from Nigeria and about ZAR 200 million coming from Ghana in, in total. Our cash balances are currently at ZAR 11 billion, which is a reduction from the previous ZAR 22 billion ran- rand that we reported at the end of the financial, financial year.
This was largely due to, you know, dividends that we paid to group shareholders of ZAR 6.2 billion, but also with very lower cash upstreaming during that period. As you recall, we took a scrip dividend from Nigeria and Ghana, so very little cash upstreaming from that perspective. We also purchased some treasury shares for our PSP scheme, as well as drew down some for and had us drew down on facilities to support the resilience program from South Africa.
Pleasing to see, however, that our holdco leverage is still within medium-term guidance of 1.5 x, even though we came from 0.8 x for reasons I've given, but also very, very strong, you know, leverage from a group perspective at 0.5x-0.4 x, which is well within our loan covenant limits of about 2x-2.5 x. Our liquidity position remains very strong, with cash balances of ZAR 11 billion, but also we still have committed undrawn facilities, so we have liquidity headroom of about ZAR 40 billion rand. Ladies and gentlemen, I'll stop there and give over to Ralph.
Thanks very much, Tsholo, I trust that you have a good sense of the shape of the financials for MTN Group, you know, both at P&L, cash flows, as well as the balance sheet. Thanks again, Tsholo, for taking the investors through. Before we do a bit of Q&A, a couple of remarks, looking ahead, you know, over the next six, and also into 2024. I think the key call-out for us is that I think in the near term, we are going to have some challenges that we need to navigate. We're making a call-out that some of the key ones are really around geopolitical....
I think the ongoing war in Ukraine has got second-round effects in sub-Saharan Africa, as we look at the state of fiscal positions of nation-states, availability of Forex, where inflation is, consumers, you know, being challenged by on disposable income. The Sudan conflict will be a challenge for us. As we reported that we've started to make progress, but obviously, if the conflict issues don't get resolved, it will make operating a lot more challenging. Inflation at elevated levels, yes, it's coming down in some markets, but, you know, if inflation remains persistent, you know, the fight against inflation, through the P&L into margins is something that we really have to, you know, push through. Then exchange rates, and, you know, obviously, the naira has been floated.
There's the I&E window, and, you know, liquidity has been actually very, very limited. We haven't been able to upstream, so that's actually something that we need to navigate as, you know, the policy regime in Nigeria, you know, is developed. As we said, the first set of policy pronouncements are short-term painful, but over the long term, we believe that these actually strengthen the investment case for Nigeria and obviously for the MTN Group. Obviously, the ZAR, you know, outlook is also something that's quite sensitive.
As Tsholo said, actually, for our CapEx, our forecast, we're still pretty much buying the same kit, but it's just exchange rates have moved in a direction where we've said we wanted to maintain our level of investment, and you've seen that exchange, the, the total CapEx has gone to, you know, ZAR 40 billion. Well, we anticipate that will be well within our range of 15%-80%. Tariff increases, you know, we're absorbing a lot of inflation, and we're having the conversations with the regulators basically to say that without sufficient cash flow being generated, it compromised our ability to keep the investment cycle at the levels that we're going through. Ongoing engagements, particularly around Nigeria, we've been seeking to get a 10%.
We haven't got it yet, but I know Karl and team continue to engage the regulator, the NCC, for that. I mean, if we need it at the MTN Nigeria level, other players, number two, number three, number four, for sure, would need it to sustain their own investments into their business. The final area that we need to navigate is really what we're calling power and tower co-agreements. On power in South Africa, as I said, really good progress. We exit, you know, Q2 with 91% network availability on average, but the sites that have got the upgrade are, you know, pretty much at stage six, been operating at historical levels of 99%. The key issue there is to push, push, push. We've got a four-pronged strategy.
you know, we're working with IHS, we're working with ATC and Huawei and ZTE, you know, across the various provinces. That's gonna be front and center the focus, you know, for Charles and the team so that we get our network in, in the right shape into the second half of the year and into quarter one. We have a bunch of tower co-agreements that we are in the process of negotiating. We closed some in the H1, but we are have a few that we needed to deal with, one in Nigeria, that there's a portfolio of towers that expires in terms of the lease agreement at the end of 2024, which we are busy renegotiating to ensure that it supports the financial profile, one, for the company.
As much as there are these near-term challenges, we still feel that the investment case for MTN remains strongly intact. What we are focused on in the near term is to execute on initiatives that really are supportive of the earnings profile growth and balance sheet resilience. For earnings, again, you know, tariffs, looking at the effective rate, and looking below the line to improve the revenue uplift. Those, you know, those initiatives remain a focus pretty much across our markets. As Tsholo has mentioned, we're focused on expense efficiencies. We've always have been, and now we are looking at a further $7 billion-$8 billion of efficiency of sustainable value uplift, you know, across our portfolio. That will get focus.
On the balance sheet, real critical focus on liability management, particularly with the focus on the 2024 bonds. The DMTN notes program has been upsized, where we can utilize that headroom in the DMTN note, you know, to, you know, deal with much of the Eurobonds that come into Q3 next year in terms of maturity date. We're super focused on those sets of initiatives that will enable us to ride through these near-term uncertainties and come out the other side stronger. Of course, we continue to focus on accelerating the platform play under Ambition 2025. We've spoken a lot about, we've spoken a lot about Fintech, but importantly, we've said there's an important story around fiber.
Our fiber is important, you know, across the portfolio, and obviously, you know, we've made good progress that we've seen. Our target is 135,000 kilometers of proprietary fiber, and, you know, that's before the East2West link build, you know, gets completed, and we're at 108. Fiber also, you know, remains, you know, important. What gives us confidence in our investment case remaining intact, and I think just a couple of data points. As I mentioned, we have 292 million subscribers, 140 are using data regularly. If you do the maths, that's like 48% of our subscribers are actively engaged on the internet. The other, you know, 52 are not experiencing the benefits of the internet.
That's a structural tailwind that we have, you know, within our base, which gives us confidence that the investment case remains strong. The second point is, when you look at data, you know, the data traffic continues to grow strongly. As I mentioned, in the period, 35% data traffic increase ex the, the JVs. When you look at the left-hand side of this chart, which we've started to show you since COVID, I know some of you are probably tired of it. It's probably my favorite graph. What's the story is, you know, how many petabytes per quarter, is in your, in your network, and you can see that we still have got a sustained story of structural growth on demand for data.
On Fintech, again, as a proxy, we look at transaction, transaction volumes, and, you know, 3.2 billion per quarter. Again, saying that there is actually pent-up demand both for, you know, data adoption as well as Fintech adoption across our markets. So these structural tailwinds, as well as the low level of adoption and usage still in our markets, is what gives us confidence that the investment case remains strong and intact. Our investment case is a simple one of a, a growing, a compelling growth opportunity on the African continent. We still see very attractive demographic demographics. Median age on our continent is 19, so people like Tsholo and I are at the wrong end of the age group.
We are very well-positioned, either in the market positions we're in, we're always number one or number two, which gives us scale to be able to compete and actually to withstand short-term headwinds, similar to the ones that I've explained. The brand is the strongest on the continent. We have extensive distribution. That gives us an advantage, one could argue an unfair advantage, and our financial profile allows us to be resilient and take advantage of opportunities as they arise. We remain very, very disciplined around capital allocation, and I think you know, that we, you know, can sound nauseating about the batting order for our capital allocation. We're putting capital first into our networks to capture this opportunity that I spoke to. We focused on deleveraging the balance sheet.
Our focus right now, for the near term, is on liability management of the Eurobonds, 2024, 2026s. You saw that on Tsholo's chart. Then, you know, cash, you know, dividends to shareholders is batting order number three. That capital allocation framework and discipline guides, you know, pretty much the decisions that we make. The risk and regulatory framework is supportive and gives a resilience to our business, and then, obviously, the shared value is a really important aspect of how we execute at MTN. From Tsholo and my's perspective, really, six takeaways from these results. Firstly, a solid performance in the half. We did see good momentum in our key markets when we look at Q2 versus Q1.
Data and Fintech are continuing to drive the growth story. Please don't forget, voice, voice continues to be resilient. The network resilience focus will continue. As I said, that's the number one focus in South Africa. We've seen really good growth and progress there. Nigeria, short-term pain, for sure, and we'll see some of the Nigeria dynamics, as Tsholo said, into Q3 results, but I think you'll see more in Q4, the impact. We also anticipate that we'll see service revenue in Nigeria pick up as we saw that Q2 grew ahead of Q1. We're very constructive of the Nigeria story. The Fintech, we've covered that enough.
Price optimization, expense efficiencies are our focus. The resilience of the group when you look at the balance sheet, focusing on cash streaming, the localizations will help, as well as the liability management. Finally, we're confirming, that we're maintaining the, the medium-term guidance, and, you know, the board anticipates that for full year 2023, dividends per share of ZAR 3.30. Ladies, and gentlemen, thank you for listening to Tsholo and I over the last, 55 or so minutes. Hopefully, you found it, helpful, and, we're open for, a few questions, which I think, Thato will orchestrate. Thank you very much.
Thanks, Ralph, and thanks, Tsholo, for, for the presentation. Hopefully, it was insightful for our stakeholders. I think as we usually do, we'll start with a few hands with inside the room, and there should be a couple of roving mics. We've got a few questions in the front.
Hi, thanks. It's Preshendran from Nedbank. Thanks for the results and for some questions. I've got three, if I can. First one is, is for Charles. I think it's on network resilience and the spend that you've done both year- to- date and going forward. What is the split between CapEx and OpEx on attaining your 91% network uptime and your plans for the future? The second question, I think, is more for Tsholo on the foreign exchange rate at which you got both Naira and cedi out of Ghana and Nigeria. Were there any other opcos where there was a material difference between the official rate and what you were outstreaming cash at?
... then the last question, not to, not to forget our main man, Ralph, is, just some thoughts on the Competition Commission's recommendations on Vodacom CIVH, and where does that put you on your thoughts around telecom, if you are still thinking about them? Thanks.
Charles?
Yeah, Presh, Presh, thank you so much for your question. The first answer, I mean, around the CapEx, let me, let me say this: we said we will spend between a range of ZAR 4 billion-ZAR 5 billion for the completion of the program. We think we'll see significant improvements by end of the year. Hopefully we'll bring the program to a close by Q1. The range that I want you to take, Presh, in terms of the CapEx, is around ZAR 4 billion-ZAR 5 billion. I think on the OpEx is a little bit of a variable number. The reason is because we're looking at a number of interventions. We're talking to other MNOs to see if we can partner to try and bring the cost down. There are a number of interventions there.
I think I'll, I'll for now just stick to a CapEx number. Thank you.
Just on the upstreaming. I mean, from Ghana, I think... Are you referring to the localization, right, that we did? I think it was at around 11 against the US dollar. On the Nigeria, important to note that it was before the significant devaluation in the naira, but it was still at around, I think, mid-500s, around NGN 550-NGN 560. In terms of the other, you know, markets where we upstreamed at, I think we can provide you with that, that breakdown. It was various markets. Yeah, so we'll look at that for you. Yeah.
Yeah, I mean, maybe to your question on the CompCom ruling, why did I think you would ask me that question? I mean, I mean, two takes from our side. I think we were surprised by the ruling. I think the part that surprised us particularly is looking at Fixed Wireless Access and fiber as markets in and of themselves. We see, and I think we see in global, in other markets, is that that's seen as just a technology, an access technology, towards either providing services in the home or on the go, and then from that, trying to figure out what the right price point customer value perspective.
You'll remember at Capital Markets Day, Jens did put a slide, which I'm sure when you go to your capital markets presentation, you'll see a continuum that says, you know, use case and affordability, and you'll see moving from FWA all the way to fiber, if you're going to open up. We've always looked at it, not as markets, but as forms of technologies to get to a customer proposition. We were surprised by it, but obviously this has still got to go through the tribunal, and, you know, we'll see what happens there. I mean, our position on consolidation actually, you know, still remains intact and actually has been reinforced by what we're seeing in other markets.
I think you see, you guys well know what's happening in the U.K., what's happening in Spain and other jurisdiction. The market structures, you know, for fixed-mobile convergence and the profit pools that, you know, companies are able to generate out, does not support 4+ player markets anymore anywhere in the globe. I think the trend is actually, the horse has bolted on that. It's just a matter of time that we need to, you know, accept in South Africa and also in other markets across the continent, that, you know, consolidation is inevitable. If you look at the market structure of, you know, which market participants seem to have the financial profile to continue to invest, generally, you're finding that there's only two players. So that's our position.
I mean, there are no ongoing talks with Telkom. I think that's your answer, but I'll give you an answer that says a market consolidation from our perspective still remains, you know, absolutely necessary in South Africa.
Thanks, Ralph. Thanks, Tsholo. Go, Nadim.
Good afternoon, and well done on a, on a resilient set of results. My name is Nadim from SBG Securities. Just two questions from my side, I think probably both for Sulu. The first one is just on the expense efficiency program. I mean, 78 billion in savings over the next year is quite impressive. Just would like to understand, does your tower contract renegotiation feature strongly in that? Also, could you give us some color as to, you know, where the low-hanging fruits are and why you have so much conviction in that target? Secondly, just on the 5 billion working capital outflow, just would like to get a sense of how, how would you think about that unwinding going forward? Thank you.
Yeah. I mean, maybe starting with the first one, I mean, I think last year we, we reported about ZAR 3.4 billion in supply chain financing, handsets, receivables, mainly in South Africa. We're, we're obviously looking at those efforts again, and we have a clear program in terms of where we think it will come from. We're bringing in other markets in terms of supply chain financing, and it's not just extension of payment terms and, you know, creating a hockey stick effect. It's actually a clear supply chain financing program that we do with some of the banks. We're also looking at handsets receivable financing for our postpaid book. There's also, you know, looking at, you know, some securitization of debt and so forth. It's quite a program.
The bulk of it will come from South Africa, and we're quite resolute that we'll be able to deliver on it as we have in the past. We've already identified where we think we will get the initiatives. I mean, I think on the ZAR 7.8 billion, as I indicated, we embarked on a global competitive benchmarking exercise with a third party. We look at how are we doing against top quartile companies of a similar size, similar nature, and complexity across the globe, but it also looks at the type of environment that they are operating in. For instance, we wouldn't look at Western Europe as an example. We look at, you know, areas of efficiencies, looking at what we were able to achieve. Is there anything else that we believe we can still continue?
That's, that's part of the, the, the program. The second part of your question is, yes, you know, we're going to be looking at, you know, tower contracts as well, but also how we contract with other major vendors. It's not just tower contracts, we're looking at, you know, the total program overall. I think for us, the, you know, the low-hanging fruits, particularly in the near term, are more about digital transformation. You know, looking at efficiencies in terms of, we talked about product and processes automation, but I think also commission structures. There's good work that's happening in South Africa already around, around looking at our commission structures and channels. Yeah.
Maybe just give you a simple example to this point about low-hanging fruit. You know, Charles is gonna get embarrassed, but, you know, if you look at the SKUs on handsets, you know, it's like 3,000. You don't need 3,000, you need, like, 200, okay? Just tackling that and running that through the process, you see a lot of efficiency. What's your product portfolio in South Africa? How many products generate 80% of your service revenue? You have a long tail effect. I think as an industry, we don't do well in terms of just cleaning up legacy and legacy of run system. To Tsholo's point, low-hanging fruits is really around digital transformation and simplification. Come with simpler, more finite. You don't have to compete with everything.
Party A and B, launch a new product, maybe you don't have to do it. You don't have to chase every horse. We feel comfortable that there's some really low-hanging fruit within that, you know, process. It's not just South Africa, but pretty much all the markets as well as the head office as well. Thanks, Ralph. Tsholo, just seeing if there's another hand in the room before I go to the webcast. Just a few questions from the webcast. We'll start with ones that have to do with Nigeria. Is there any update on the price hikes? I think you touched on it, but what happens if other operators do not support the, the demand for price hikes? Would you still be able to get one? Maybe just some context there.
Then just a second question, maybe for Tsholo. Would you see a change in CapEx strategy post naira devaluation? Would you lower the near-term CapEx to limit the impact on free cash flow?
Yeah, if I can start with the second question, I think capital productivity is always an ongoing thing for us, and how we manage CapEx, we manage it in local currency. What you'll have seen with Nigeria specifically, is that we actually keep them at the dollarized rate, which is why you not, not necessarily would have seen. I think the main issue with the CapEx was really around the ZAR weakening against most currencies, and therefore, the implication for the group CapEx envelope. That's what the main issue are. I think, as we indicated, important for us to continue to invest in faster-growing areas where we're seeing reasonable return, and we'll continue to do that.
It's really about, you know, how we prioritize our capex, particularly through our value-based capital allocation program.
Thanks, Tsholo. On price hikes?
Yeah, I'll pick up on price hikes. Look, I mean, the price hikes, we're having discussions with the authorities, NCC. I think there's probably a desire to see the minister appointed first. You know, for us, you know, we're number one in terms of size and scale. We have the ability to absorb some of the inflation impacts, but there are other players. Number three and number four also need the price increase. The price increase was not, you know, motivated by MTN, to be clear. It was motivated by the industry association, of which we're a part of. We think that to have a healthy, competitive context, actually, you know, the number three and number four also need a bit of a price uplift to, you know, to manage the inflation impacts.
They don't have our size and scale. They don't have the margin, that we are generating to be able to absorb this. Let's see what happens, you know, post the new minister, you know, being appointed. The process is going through Senate, as you guys all know, and, you know, Karl and team are constantly engaging for that, and let's see what happens.
Thanks, Ralph. Then maybe just a few questions on Fintech. What would the usage of the proceeds, proceeds from the stake sale be? Would you look for more strategic partners? I think you covered that. Then the second one is, how do you think about the minorities in terms of the, the transactions around the Fintech business?
Yeah. Are these all for me? I guess they are.
Yeah.
Yeah, look, I mean, proceeds, we always have a kind of catchall phrase, general corporate purposes. I don't think most companies say more than that, but obviously, the business is funding its own growth. one doesn't really need growth capital to accelerate it. It funds its own. You know, that's kind of like for Tsholo to figure out what she does with the money. It's not needed for acceleration, you know, of the business because it generates cash flow. You saw the margin that it generates, as well as the free cash flow that you saw on a consolidated basis. It's pretty much close to, the, the cash flow.
Yeah, in terms of further minority, we'll explore, but as I said, you know, we will go up to a maximum of 30, but obviously only if it makes sense, and the partners can bring something to the table that we feel is value creative. Either, you know, capabilities like Mastercard, or they're very skilled in supporting the growth and acceleration of businesses similar to this, particularly in our advanced services. So, that's something that we'll focus on. Remember that this is a deal at the top core level for Group Fintech, not into the minority. So, it's at the group level, but it doesn't filter into each of the minorities.
We have 16, actually, mobile money businesses under Group Fintech. They all come in as the first of potentially several minorities at the Group Fintech level.
Staying on topic, it's come up a few times, I'll ask the question. How do you think about the prospects of listing the Fintech business, do you have any timelines? Then maybe just a separate question on IHS. Can you give us an update on IHS Towers' governance issues? Has a special meeting been called to vote on the matter that you've raised?
Yeah, I mean, on timing, you know, we're not rushing towards a liquidity event. Want to build this business in a very robust and a future-fit model. I think one can well anticipate that, you know, if there is any event, you certainly won't see it this side of, you know, kind of four years. Wanna build this thing up properly. You know, if you think about it, we know that there's another party that's probably looking to go to IPO in the next year or so. We'll take a bit more time. There isn't a rush. We're not trying to do kind of fancy value reveal, so to speak. We'll take our time to ensure that the advanced services have a critical mass within our financial profile.
That's probably what's going to influence the, the timing. On IHS, look, we've engaged, you know, extensively with IHS, towards them tabling our proposal, which we believe is a very reasonable proposal. We want a removal of the cap, and there's a long history to this, and I guess, you know, each party will say its share. When we went towards the listing, we did raise this, that this is a problem for us, in the near term, and the cure for it was, these were the first shares to have been sold in a sell-down process, which had been anticipated, but it was our number one concern, actually ahead of the valuation, you know, towards the IPO.
I mean, we, we do feel very aggrieved that the IHS board has refused. As we said, you know, all options are on the table for us. We will engage other IHS shareholders, and if we need to litigate with IHS, we'll step into that ring. Governance, the governance issues for us are super important, and we're not gonna back down on this. We will, we will engage, you know, as I said, other shareholders, and litigation is absolutely an option that we will take against IHS.
Thanks, Ralph. Just cognizant of the time, maybe just wrap up with a couple of questions for Tsholo. It relates to localization proceeds or, I guess, proceeds that are still outstanding in Nigeria. Can you please quantify that? Second to that, do you intend to take up the scrip dividend again in MTN Nigeria and MTN Ghana?
Yeah, I mean, I think firstly, on the localization, I think we're pretty much complete. We've been able to get probably 99.99%, or whatever the case may be, so there isn't anything outstanding. We always said that the scrip dividend was really a function of not being able to get hard liquidity. I think, you know, with now the liberalization of the Forex market, we expect that things will stabilize. We are not intending to take a scrip dividend for the interim dividend that was declared. Yeah.
Thanks, Tsholo. I think with that, we'll probably wrap up. Ralph, do you have any closing comments?
I know we've taken a lot of time, just suffice to thank everybody for joining in the results presentation. If you have any further questions, you know where Thato is, we look forward to engaging the shareholders over the next couple of weeks. Yeah, you know, talking more about the story that we feel is very compelling and why we remain very excited about the investment case for MTN. To the MTNers who've delivered these results, again, much thanks to all of you. Thanks very much.
Thank you so much.