MTN South Africa struggles to keep its subscribers

MTN has reported a big drop in earnings for the six months ended June 2016, which it says is primarily down to its operations in Nigeria.

The company has also shed customers in its South African operation, as it ‘continued to operate in a challenging environment’.

MTN said it has made strides towards resolving these challenges although many of these factors fall outside of its control.

On 10 June MTN Nigeria resolved its issues with the Federal Government of Nigeria (FGN) and agreed to pay the FGN a total cash amount of 330 billion Nigerian naira $1.671 billion, using the exchange rate prevailing at the time) over three years in a full and final settlement.

Apart from the Nigerian regulatory fine, MTN said that the depreciation of local currencies against the US dollar had a substantial impact on the Group’s results. This resulted in foreign exchange losses amounting to R3.606 billion during the period.

Financial results snapshot for the six months ended 30 June 2016:

– Group subscribers remained flat at 232.6 million from 31 December 2015
– Revenue increased by 14.0% to R78.88 billion
– Data revenue increased by 32.2% to R19.85 billion
– Voice traffic and data traffic increased by 7.9% and 135.3% respectively
– EBITDA decreased by 3.3% to R29.273 billion
– Headline loss per share of 271 cents
– Interim dividend of 250 cents per share
– Nigeria regulatory fine re-measurement impact of R10.5 billion

MTN South Africa reported a lower-than-expected performance, negatively impacted by network outages in some areas, competition and economic pressure impacting consumer spending.

The result was supported by good growth in data usage benefiting from aggressive smartphone device sales and continued efforts to improve 3G and LTE network quality.

The operation’s subscriber base declined 2.6% to 29.8 million. The pre-paid and post-paid segments declined by 2.7% to 24.7 million and 2.1% to 5.1 million, respectively, MTN said.

Total revenue increased by 5.1% to R19.84 billion mainly as a result of higher data and device revenue growth. This was partly offset by a 6.1% decline in outgoing voice revenue.

Service revenue, which excludes device revenue, remained relatively flat. Data revenue increased by 19.2%, contributing 34.1% to total revenue.

The number of smartphones on the network increased by 18.4% to 9.3 million while megabytes per user increased 53.8% for the period.

Capex for the six months amounted to R4.77 billion with the rollout of 369 co-located 3G sites and 284 LTE sites.

The operation continued to improve quality and capacity of the network in key cities to cater for increased data traffic. In addition, 175 sites were connected to fibre.

“Fibre to the home connections remain a priority with approximately 10,000 homes passed, of which 40% were rolled out during the period,” MTN said.

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MTN South Africa struggles to keep its subscribers