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MTN ups subscribers despite challenges

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 27 May 2015
Data, digital services and mobile money remain key areas of focus for MTN, says CEO and president Sifiso Dabengwa.
Data, digital services and mobile money remain key areas of focus for MTN, says CEO and president Sifiso Dabengwa.

While the telecoms environment remains challenging across MTN's markets, with persistent price competition and regulatory challenges, the company anticipates stability in operating trends over the balance of the year.

This is according to president and CEO Sifiso Dabengwa, who outlined the group's performance for the four months to April at its annual general meeting today.

"As traditional voice revenue remains under pressure, data, digital services and mobile money remain key areas of focus for MTN. In addition, improving customer experience in all of our operations, cost optimisation and the execution of our infrastructure-sharing strategy remain central to our strategy," says Dabengwa.

Subscriber base

MTN Group has increased its subscriber numbers by 8% year-on-year (YOY), growing its total base to 229.2 million as at the end of April.

The increase was supported by MTN Nigeria, with about 1.5 million net additions, says Dabengwa.

MTN's South African business recorded 133 000 net additions and was impacted by challenges experienced in the prepaid distribution channel. "However, in the month of April, MTN SA recorded 168 000 net additions."

Increasing minutes

Total minutes on MTN's network increased by 14% YOY, while total minutes on the South African network are up 137% YOY, an increase Dabengwa attributes to the reduction in tariffs over the past 18 months.

"The operation remains focused on the network rollout to ensure the network is adequately positioned to sustain the growth in both voice and data traffic."

Although Nigerian minutes were down 2% year-to-date (YTD), MTN expects its recently revised promotions to drive incremental traffic volumes over the balance of the year.

Recorded revenue

While MTN 's YTD organic revenue increased marginally, reported revenue declined YOY, with the weaker exchange rates being a drag of some 6%. This was predominately driven by the naira which has weakened by 9% against the rand over the same period in the prior year.

While Nigeria has continued to see quarterly sequential improvements in local currency revenue, the revenue for the four months to 30 April is down approximately 1% YOY.

Service revenue in the South African operation continue to show positive momentum and was 3.3% higher YOY. The challenges experienced with handset distribution have, however, resulted in a 21% YOY decline in handset sales and negatively impacted total revenue growth.

Iran, Ghana, Uganda and Sudan recorded healthy revenue growth for the period, while revenue in Cameroon was negatively impacted by the recent introduction of a new competitor.

"Data revenue across the group continued to deliver satisfactory growth in most of our markets, increasing by 18% YOY and now contributes 21% to total revenue compared to 17% for the same period last year," says Dabengwa. "This remains a key focus area for the business."

EBITDA decline

MTN's earnings before interest, tax, depreciation and amortisation (EBITDA) declined when compared to the same period last year, largely due to weakness in the naira relative to the rand. Despite lower than anticipated revenue, the group continues to execute well on cost optimisation initiatives across the majority of operations.

In Nigeria, the EBITDA margin was negatively impacted by both the tower transaction as well as increased dollar denominated costs related to the weaker exchange rate.

The EBITDA margin in SA continues to benefit from the cost initiatives implemented in the second half of 2014, says MTN.

EBITDA margins in Ghana and Cameroon in particular have been negatively affected by the weakness in currencies and dollar-denominated expenses.

Total capital expenditure (capex) is flat YOY and, while currently below budget, MTN expects full year capex of R30 billion. "Importantly, we expect a total capex investment of R10 billion for MTN South Africa in the year," adds Dabengwa.

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