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%.

Voice as retention feature

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 Cell C’s maiden results as a listed company, for the six months to 30 November 2025, almost all service revenue growth came from wholesale, which grew 22.5% to R840-million across 5.1 million MVNO lines. Cell C, in turn, is a roaming customer of MTN. A meaningful share of the traffic eroding MTN’s retail prepaid voice revenue crosses MTN’s own radio network on wholesale terms.

What investors will be watching when MTN reports its 2026 interim results later this month is whether the second-quarter voice decline is steeper than the first quarter’s 9.6%, which would confirm an accelerating trend. Investors will also want to see whether MTN South Africa’s Ebitda margin recovers towards the 35-37% guidance range or stays in the low 30s and whether the company revises its medium-term guidance for the unit, currently low-to-mid single-digit service revenue growth, which assumes voice stabilises.

MTN says the pressure was “previously communicated and expected”. That is true. But it is also a description of a decline the company has now anticipated four times in a row without arresting it. — © 2026 NewsCentral Media