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MTN revenue increases in 'challenging' year

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 04 Mar 2015
MTN was hit by aggressive price competition, increased regulatory requirements and pressure on consumer expenditure.
MTN was hit by aggressive price competition, increased regulatory requirements and pressure on consumer expenditure.

Mobile giant MTN this morning reported its group revenue grew 6.4%, to R146 billion, for the year ended 31 December 2014.

This was largely due to an increase of 12.1% in MTN Nigeria's revenue and a decline of 3.9% in MTN SA's revenue.

"MTN South Africa's performance was in line with our expectations and provided clear evidence in the second half of a successful turnaround, with consistent month-on-month improvements in the last six months of the year," says the company.

Group subscribers increased by 7.5%, to 223.4 million, driven by competitive pricing, segmented offerings and improved network quality and capacity in many markets. According to the company, group subscriber numbers were, however, affected by the alignment of internal subscriber reporting methodology in Cameroon, which negatively impacted reported subscriber numbers by 1.6 million.

Data revenue increased by 33.2% in the year, to R27 billion, to contribute 18.7% to total revenue at year-end. "Both our large and small opco [operating companies] clusters delivered pleasing results, with reported revenue growth of 7.1% and 13%, respectively," says MTN.

Voice traffic and data traffic increased 6.5% and 85.8%, respectively, during the period under review.

Group earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 10.2%, to R65.5 billion. The operator says it made further progress in its cost optimisation efforts, which supported a 1.5 percentage point expansion in the EBITDA margin, to 44.8% for the year.

Capital expenditure was R25.2 billion, 16.3% lower than the previous year. During 2014, the group's operations rolled out 3 669 2G, 6 491 largely co-located 3G and 684 LTE sites, facilitating increased voice and data usage on its network.

The mobile operator also reported an increase of 8.9% - to 1 536c - in headline earnings per share and an increase of 20% - to 1 752c - in attributable earnings per share, during the period under review. Cash inflows generated by operations increased by 8.2%, to R64.6 billion.

The company says its 2014 results reflect a challenging year, impacted by aggressive price competition, increased regulatory requirements and pressure on consumer expenditure.

"The sharp decline in the oil price in the second half of the year had a marked impact on the economies and exchange rates of a number of African and Middle Eastern countries. Notwithstanding these conditions, most of MTN's large and small operating companies showed promising improvements in operational performance."

MTN says it continued to benefit from encouraging growth in non-voice revenue, driven by various data initiatives - including the Mobile Money offering - across key markets. "We also made good progress in transforming our operating model, particularly in reducing costs and monetising assets with the finalisation of the agreement to sell and lease back towers in Nigeria in the fourth quarter of 2014.

"MTN Nigeria's performance was below expectations, impacted largely by regulatory determinations and economic pressures as well as operational challenges."

In 2015, MTN says it expects to benefit from a number of interventions put in place in SA and Nigeria in the previous year. "In SA, we expect to build on the positive momentum gained on revenue and subscriber additions in the second half of 2014. The South African operation will also accelerate its immediate capex plans to support our medium-term growth prospects, particularly in the data area."

The operator says MTN Nigeria will focus on active subscriber management, providing more competitive offerings and improving data usage. "We continue to engage positively with the regulator. However, in Nigeria some level of uncertainty remains with regards to the implications of the oil price and currency fluctuations, which may lead to slower economic growth. This may result in some headwinds for the business in 2015."

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