MTN profit tumbles on R9.3 billion fine provision

Mobile operator MTN said on Wednesday that its results for the year ended December 2015, reflect the challenging operating environment experienced in the year.

Weak macro-economic conditions, increased market competition, heightened regulatory pressures, notably in Nigeria, and operational challenges in some of our markets resulted in a lower-than-expected performance.

MTN reported a 51.4% decline in basic headline earnings per share (HEPS), to 746 cents. This was largely a result of the Nigerian regulatory fine provision (R9.287 billion), which had a 402 cents negative impact on HEPS.

Excluding the Nigerian regulatory fine provision, HEPS still declined 25.3%, MTN said.

In addition, HEPS were negatively impacted by hyperinflation of 54 cents and losses from investment in African Internet Holdings (AIH) and Middle East Internet Holdings (MEIH) and from the tower companies.

Excluding the impact of these operations, on a like-for-like basis HEPS still declined 14.3%, MTN said.

Excluding hyperinflation, profit from operations declined to R35.3 billion, from  R36.59 billion.

The group’s subscriber base increased by 4.1% to 232.5 million, despite the disconnection of 10.4 million subscribers to ensure compliance with subscriber regulatory registration requirements in Nigeria and Uganda.

Group revenue remained flat in the year largely due to a decline in voice revenue in Nigeria and a reduction in handset revenue in South Africa, MTN said.

This followed the industrial action experienced in the first half of the year which led to lower distribution of handsets.

MTN South Africa continued to show encouraging service revenue, which excludes handset revenue and other revenue, growth trends, regaining relevance in the pre-paid segment in the second half of the year.

Revenue growth in South Africa was supported by strong growth in data, benefiting from extensive 3G and LTE network rollout in the year, MTN said.

South Africa Highlights

  • Subscribers increased by 9.3% to 30.6 million
  • Revenue increased by 2.9% to R40 billion
  • Service revenue, which excludes handset revenue and other revenue, increased by 7.5%
  • Data revenue increased by 37.2%
  • EBITDA increased to R13.37 billion
  • Capex up to R10.95 billion, from R5.7 billion

Group Highlights

  • Group subscribers increased 4.1% to 232.5 million
  • Revenue increased 0.1% to R146.35 billion
  • Data revenue increased 30.2% to R33.87 billion
  • EBITDA decreased 8.6% to R59.918 billion
  • HEPS decreased 51.4% to 746 cents
  • Final dividend of 830 cents per share, with total dividend of R13.10 per share
  • Capex increased 15.7% to R29.199 billion

The operator said the fine imposed on MTN Nigeria and the related process continues to receive extensive attention.

The Nigerian Communication Commission (NCC) fined MTN ₦1.04-trillion (around R71-billion at the time) in October 2015 for not disconnecting unregistered SIMs on its network.

After negotiations with Nigerian authorities, the fine was reduced by 25% to ₦780-billion.

In the near term, MTN said it anticipates the resolution of the ongoing suspension of regulatory services which continues to restrict new tariff plans and promotions for MTN Nigeria.

“We expect the South African operation to continue the positive trend shown during H2 2015, improving its operational performance with the support of strong leadership, leveraging an enhanced 3G/LTE device strategy, as well as increased focus on customer services,” MTN said.

The extensive 3G and LTE network rollout in 2015 will also benefit the operation in 2016.

“Improving network quality and capacity in key markets remains a priority. We will continue to close and improve coverage of 3G, LTE and LTE advanced in Nigeria, South Africa, Ghana and Cameroon.

“In addition, improved quality and throughput in homes and fixed locations through the rollout of fibre-to-the-home (FTTH) in South Africa, Nigeria, Ghana and Iran will be a focus in 2016,” the company said.

MTN Group operates in 22 countries in Africa and the Middle East.

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MTN profit tumbles on R9.3 billion fine provision