African Telecoms’ Data Boom Is No Longer Enough to Protect Margins

The structural transition of African telecommunications from voice-centric networks to data and financial platforms is complete, but top-line growth no longer guarantees expanding margins, with operators including MTN Group, Airtel Africa, Safaricom and Telkom SA finding that data volume gains alone cannot protect earnings without aggressive cost restructuring and higher mobile-money transaction velocity.Across the continent, data traffic has overtaken voice as the primary revenue engine, with MTN Group’s nine-month results showing service revenue up 17.2 per cent in constant currency to R176.2 billion, supported by a 27.3 per cent surge in data traffic to 22,754 petabytes, while Airtel Africa’s data segment recorded 28 per cent growth in constant currency, with data revenue surpassing legacy voice income as active smartphone penetration reached 51.6 per cent and monthly consumption averaged 13.3 gigabytes per user. Despite these gains, translating data demand into free cash flow is constrained by two operational pressures: compressing unit yields in fintech and an escalating energy tax across off-grid infrastructure.

Unlike legacy voice infrastructure, which yielded high cash flows once base stations were constructed, mobile data requires continuous capital deployment, with expanding data capacity forcing operators into perpetual capital-expenditure cycles to support rising traffic volumes without a linear increase in per-gigabyte returns. The economics of data-heavy networks are fundamentally different from voice-era margins, with operators facing rising energy costs, spectrum needs, fibre backhaul, tower maintenance and network upgrades that scale with traffic rather than remaining fixed.

MTN’s group EBITDA margin expanded to 47.9 per cent, up 2.8 percentage points, while Airtel Africa’s EBITDA margin reached 50.3 per cent, but these gains have been achieved through aggressive corporate expense reduction rather than lower operational input costs, with rising fuel costs continuing to exert inflationary pressure on the cost base. Airtel’s CEO Sunil Taldar noted that despite a twofold increase in fuel costs over the year, the company delivered a record underlying EBITDA margin of 50.4 per cent in Q2 through a combination of operational discipline, ongoing cost efficiency programmes and continued scale benefits.

While total transaction values continue to expand across platforms such as MTN’s MoMo and Airtel Money, scaling pure payment volume no longer delivers immediate margin expansion without higher-yield credit, insurance, and international remittance products, with fintech revenue growth slowing even as transaction volumes rise. MTN’s fintech revenue grew by just 1.6 per cent to R22.6 billion, up 12.7 per cent, despite the group’s data revenue surging 20.9 per cent, illustrating the divergence between volume growth and margin expansion in financial services.

The shift reflects a broader pattern where operators are finding that data volume gains alone cannot protect earnings, with the need to monetise data through value-added services, enterprise solutions and financial products becoming more critical as per-gigabyte yields compress. Airtel’s data revenue rose 35.3 per cent to $1.57 billion, accounting for approximately 41 per cent of group revenue, but the company’s underlying EBITDA margin declined by 287 basis points to 48.9 per cent, largely because of changes in intra-group agreements, underscoring the tension between growth and profitability.

Operators are increasingly relying on “more-for-more” pricing approaches, where higher-volume users pay less revenue per gigabyte, with Airtel’s CEO noting that newer data users tend to enter at lower consumption and ARPU levels, creating a structural challenge for per-user revenue growth. The company’s ability to sustain margins will depend on continued investment in network capacity, cost efficiency programmes and the development of higher-margin financial services, with the group’s focus on customer growth, data adoption and increased usage translating into a 10.7 per cent ARPU growth and 28 per cent increase in data revenues.

The challenge now is to convert the structural shift towards data and financial platforms into sustainable margin expansion, with operators needing to balance the capital intensity of data networks with the need to protect profitability through cost discipline, pricing strategy and the development of higher-yield financial products.

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