South Africa's second-largest cellular operator, MTN, does not expect to deliver the same level of performance in the second half of the year, after bolstering revenue 9.5% during the first six months.
However, the group - which has 35.5% of the local market - does expect good results from the local operation, despite high levels of penetration, and will be rolling out further competitive offerings.
In South Africa, where there is an estimated penetration of 133%, MTN grew subscribers 6.8% to 23.5 million, a gain of 1.5 million customers, which was mostly due to growth in the prepaid segment. By comparison, SA's largest operator - Vodacom - gained 6.1 million new subscribers in the year to March.
Turnover from the local unit, MTN's second-largest operation after Nigeria, grew 9.5% to R19.9 million in the six months to June, as data use leapt by 50%. Vodacom grew service revenue 4.4% to R48.4 million in the last full-year.
Lower levels
MTN SA MD Karel Pienaar says the unit will not be able to sustain its performance to the same level, as it is a very competitive market. However, the group expects good results in the second half and will reach a “percentage” of its first-half figures, he says.
Pienaar says MTN has a lot in its “arsenal” when it comes to competitive pricing and hinted at new promotions in the second half, but would not say anything further. MTN Zone has led to good growth in the prepaid segment, but the company has to be cautious about bastardising its existing base, he notes.
MTN intends adding a total of three million new subscribers to its network in SA during the full-year, an increase on its previous guidance of 2.9 million. In total, the group aims to gain 21.250 million new customers, a slight decline on the previous target of 21.3 million.
It sees less additions in Uganda due to SIM card registration laws, but expects 500 000 more subscribers in Iran, and 50 000 less in Syria, which is battling political unrest.
The group grew subscribers 6.9% to 176 million compared with its base at the end of December. Revenue gained 17.5% to R66.4 billion, which was mostly driven by strong operational performance and competitive value propositions in SA, Iran and Ghana. However, growth in Nigeria was lower than expected due to “intense competition”.
Data driver
The contract segment gained 9.4% to 4.2 million, driven by competitive data offerings and the continued success of hybrid packages. Data revenue gained 49% and now contributes 15.9% to total revenue compared to 11.6% in the first half of last year.
Pienaar says data traffic has grown 300% between last July and July 2012, and MTN is now seeing 1.4 terabytes of data every month. At the end of June, there were 11.9 million data users with 4.4 million smartphones.
Airtime and subscription revenue showed good growth of 5.9%, while handset revenue grew 29.1% off the back of a demand for higher value phones. However, blended average revenue per user moved down to R123 from R134, although minutes of use were stable.
This is due to mix and telemetry SIM cards, says CEO and president Sifiso Dabengwa. He says the group has no intention of losing its share of value, and if the overall market value declines, it will make sure its proportion does not decline.
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