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MTN SA revenue grows, Nigeria sees recovery

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 24 Oct 2016
MTN group subscribers grew by 0.9% in the third quarter to 234.7 million, as Nigeria's numbers recovered and SA's dropped.
MTN group subscribers grew by 0.9% in the third quarter to 234.7 million, as Nigeria's numbers recovered and SA's dropped.

MTN South Africa saw an improvement in revenue for the third quarter of the year despite subscriber numbers falling slightly.

Meanwhile, Nigeria reported a smaller revenue decline in the quarter ended 30 September, as subscriber numbers continued to recover in the West African country and ticked up for the group in general.

"Despite a tough operating environment as a result of weaker macro-economic conditions, particularly in oil-dependent economies, as well as the regulatory challenges experienced, we are confident the fundamental changes implemented over the past year position the group well to participate efficiently and effectively in the data evolution and ensure sound stakeholder relationships and governance processes," MTN Group executive chairman Phuthuma Nhleko says in a statement.

MTN South Africa's revenue grew by over 3.6% quarter-on-quarter, while its earnings before interest, tax, depreciation and amortisation (EBITDA) margin expanded by over 2% quarter-on-quarter. MTN South Africa expects to maintain this improvement in EBITDA margin in the fourth quarter.

Meanwhile, after reporting a year-on-year decline in revenue in the first and second quarters of 2016 of 6.2% and 3.3% respectively, in the third quarter MTN Nigeria's revenue decline was limited to 1.2% year-on-year. The group says it is confident MTN Nigeria will deliver positive year-on-year revenue metrics in the fourth quarter. In Nigeria, constant currency data revenue increased by 6.7% and contributed 20.4% to total revenue.

"This is largely the result of a weaker macro-economic environment negatively impacting consumers, a decline in the effective data tariff because of competition and regulatory requirements impacting out-of-bundle billing."

In SA, data revenue increased by 15.1% year-on-year and contributed 34.4% to total revenue.

The number of smartphones on the SA network also increased by 9.3% year-on-year, to 9.2 million. Average revenue per user increased by 10.4% quarter-on-quarter.

Nigerian data traffic increased by almost 44% year-on-year and the MTN Nigeria network saw the number of smartphones on the network increase by over 59% to 19.2 million year-on-year.

Nhleko says MTN is pleased to report it has commenced the repatriation of cash from MTN Irancell to the group and expects to conclude the process over the next six months.

The changes implemented over the past year position MTN to participate efficiently in the data evolution, says MTN Group executive chairman Phuthuma Nhleko.
The changes implemented over the past year position MTN to participate efficiently in the data evolution, says MTN Group executive chairman Phuthuma Nhleko.

MTN Irancell's constant currency data revenue increased by over 61% quarter-on-quarter and contributed 41.5% to total revenue despite a decrease in data tariffs. The number of smartphones on the Iranian network increased by 35% to over 29 million.

MTN says it also embarked on a material transformation project during the third quarter, focusing initially on its key operations of Nigeria and SA.

"A dedicated transformation office was established to drive this transformation to maximise revenue growth, enable a distinct customer experience and ensure operational efficiencies, including concerted initiatives to drive optimal return on investment, with hard targets set for the next 12, 18 and 24 months."

Nhleko says the operations are expected to deliver the first results on clearly defined targets in the first half of 2017.

Subscriber ebb and flow

MTN grew its group subscribers by 0.9% quarter-on-quarter to a total of 234.7 million, as Nigeria's numbers recovered slightly despite a small drop in subscribers in SA.

MTN South Africa reported a marginal decline in subscribers of 0.5% quarter-on-quarter to 29.7 million. This was as a result of a 0.7% decline in the prepaid subscriber base to 24.5 million, largely due to churn from low revenue-generating customers. The postpaid subscriber base, however, increased by 0.7% to 5.2 million.

The rest of the SEA region - which includes Uganda, Zambia, Rwanda, Botswana (joint venture), Swaziland (joint venture) and South Sudan - saw the number of subscribers increased by 1% to 23.3 million. This was mainly driven by growth of almost 3% in Uganda, which now has 10.2 million customers.

MTN Nigeria reported a 2.5% quarter-on-quarter increase in its subscriber base to 60.5 million. The rest of the WECA region - Ghana, Cameroon, Ivory Coast, Benin, Congo Brazzaville, Liberia, Guinea Conakry and Guinea Bissau - saw overall subscriber numbers grow by 2.3% to 47.6 million. This was driven by 2.7% subscriber growth in Ghana to 18 million, and 3.7% growth in the Ivory Coast to over 8.5 million subscribers.

MTN Irancell increased its subscriber base by 1.1% quarter-on-quarter to 47.8 million "in a highly penetrated market". However, the rest of the MENA region - made up of Syria, Sudan, Yemen, Afghanistan and Cyprus - saw subscriber numbers drop by almost 4%, to 25.8 million, owing to a 13% decline in Sudan due to the subscriber registration process.

SEA has 52.9 million subscribers, WECA remains the largest contributor with over 108 million subscribers while MENA has 73.6 million customers.

New CEO

MTN also announced today that new group president and CEO Rob Shuter will officially start his role on 13 March 2017. Shuter was appointed in June and at the time the company said he might only start by 1 July 2017 after completing contractual obligations at Vodafone, where he is currently CEO of the European cluster.

Nhleko will revert to his role as non-executive chairman as soon as Shuter takes over, but until then will continue as executive chairman "to provide oversight".

MTN plans to appoint a new group CFO and make a few other outstanding senior management changes and appointments by year-end. This after group CFO Brett Goschen left the telecoms operator at the end of September "to pursue other interests". Gunter Engling has stepped in as acting group CFO until a permanent replacement is found.

During the quarter, MTN also appointed Felleng Sekha as executive for regulatory affairs and public policy, effective 10 October 2016.

Overall, the group saw constant currency data revenue increase by 21% year-on-year, to contribute 26.4% to total revenue. Group capex increased 10.5% year-on-year to R21 230 million and the telecoms operator added 2 669 3G sites and 1 995 4G sites. Group data traffic increased 142% year-on-year, while voice traffic increased by 1.8%.

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