MTN SA - the second-largest operator in the country - saw revenue slide during the first four months of the year, as it continues to remain under pressure in a highly-competitive market.
CEO and president Sifiso Dabengwa notes, during the first four months of the year, MTN SA had "negative revenue growth". He attributed this to a reduction in retail rates, and the 1 April trim in mobile termination rates.
Termination rates dropped to 20c - half the previous rate - for MTN and Vodacom from April. Cell C and Telkom Mobile now charge the two larger players more than double that (44c) to terminate calls on their network.
However, these rates are only in effect until October, after a South Gauteng High Court ruled at the end of March that the Independent Communications Authority of SA's (ICASA's) rate structure was "unlawful and invalid", but suspended the order of invalidity for a period of six months. ICASA has been reviewing the rates.
Competitive pressures
For the year to December, MTN reported local revenue down 6.1%, a dip it said was mostly caused by the way it accounts for handset sales. Stripping out this accounting adjustment, revenue dropped 1.6%, to R39.7 billion.
MTN, which has 24.9 million subscribers in SA, expects pressure from lower retail and interconnect rates to persist for at least the next two quarters, says Dabengwa. Analysts previously pegged MTN's lagging income on its inability to compete effectively in the market; an aspect the company has admitted affected it in the six months to June 2013.
The group reacted to the pricing environment in April, dropping its prepaid rate to 79c on a permanent basis. Vodacom has also offered a 79c prepaid rate, although only on promotion, and Cell C cut its prepaid rate down to 66c.
Data push
Dabengwa notes MTN's earnings before interest, tax, depreciation and amortisation dropped marginally because of lower outgoing voice revenue, a reduction in interconnect revenue, and higher rent and utilities costs. Operators have been trying to offset declining voice revenue through, among other things, increased data.
Data revenue remains the largest contributor to revenue growth with 14.5 million data users on the network, says Dabengwa. He was addressing shareholders at the group's annual general meeting yesterday.
Overall, MTN - which has operations in 22 countries across Africa and the Middle East, increased its subscriber base 2%, mostly due to MTN Nigeria's strong uptake of subscribers in April after the removal of the SIM sale ban imposed in March 2014. It had 210 million subscribers at the end of December.
Combined group revenue gained in the double digits, says Dabengwa.
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