MTN South Africa service revenue grows, but subscribers fall

MTN said in a quarterly update for the period ended March 2019, that subscribers in South Africa declined to 30 million, from 31.19 million in the prior quarter, but up from a year earlier (29.8 million).

Average revenue per user for South African subscribers also declined to R93.04, from R101.32 .

Postpaid ARPU decreased from R281.10 to R278.50, while prepaid ARPU dropped from R80.50 to R71.72 during the period.

Salient features:

  • Group subscribers increased quarter-on-quarter (QoQ) by 4.0 million to 236.6 million;
  • Active data subscribers increased QoQ by 2.6 million to 81.3 million;
  • Active MTN Mobile Money customers increased QoQ by 1.2 million to 28.3 million;
  • Group service revenue increased year-on-year (YoY) by 10%;
  • MTN South Africa service revenue increased YoY by 4.6% with an earnings before interest, tax and depreciation (EBITDA) margin of 38.8%;
  • MTN Nigeria service revenue increased YoY by 13.4% with an EBITDA margin of 53.3%;
  • Reported growth rates for both service revenue and EBITDA were higher than constant currency rates.

Group president and CEO, Rob Shuter, said: “MTN’s positive commercial momentum continued in the first quarter with a pleasing operational performance across the markets, led by South Africa, Nigeria and Ghana. Group service revenue grew by 10.0% YoY in line with our medium-term guidance of double-digit service revenue growth.”

The growth in service revenue was supported by the continued expansion in voice, data and fintech revenue, he said.

“Outgoing voice revenue increased by 5.9%, data revenue increased by 18.3% and fintech revenue increased by 30.6%. Digital revenue declined by 45.4%, impacted by the work that continues around optimising our value-added services business. Currency markets were favourable in the quarter, resulting in reported service revenue growth higher than constant currency rates.

“We made good progress in our work to build a digital operator, adding 2.6 million active data subscribers and 1.2 million MTN Mobile Money subscribers,” Shuter said.

MTN South Africa

MTN South Africa recorded YoY service revenue growth of 4.6%, buoyed by a strong performance from the wholesale business. Data and fintech revenue increased by 3.1% and 21.1% respectively, while digital and outgoing voice revenue declined by 35.7% and 4.4% respectively.

“Given out-of-bundle price reductions taken in the period, and a challenging economic environment, prepaid service revenue decreased by 5.1%.

“As previously communicated, we expect that prepaid service revenue will remain under pressure for a few quarters, before we see recharge resilience and changes in customer behaviour drive up in-bundle service revenue. Consumer post-paid service revenue increased by an encouraging 11.5%,” Shuter said.

The enterprise business continued to stabilise and the wholesale business recorded excellent growth with contribution from both Telkom and Cell C roaming traffic, MTN said.

At the end of the quarter, MTN South Africa had 24.1 million prepaid users (down 4.9% QoQ), 5.9 million postpaid subscribers (up 1.2% QoQ) and 3.0 million IoT subscribers.

MTN Nigeria

MTN Nigeria reported a 13.4% rise in YoY service revenue. This was led by a 32.4% increase in data revenue and a 12.7%  increase in voice revenue. A general slowdown in economic activities during the election period impacted  voice revenue growth, the operator said.

Growth in data revenue was supported by an increase in smartphone penetration, improved network quality and a 9.1% increase QoQ in active data subscribers to 20.4 million, MTN said.

Total subscribers increased by 3.6% QoQ to 60.3 million.

Nigeria legal matter

MTN noted that it took legal action after receiving a demand notice from the Attorney General of the Federal Republic of Nigeria (AGF) alleging unpaid duties and taxes between 2007 and 2017.

The lawsuit challenges the authority  of the AGF to deal with issues around tax and custom duties. According to the law, oversight for this is the responsibility of the Federal Inland Revenue Service (FIRS) and Nigerian Customs Service (NCS), it said.

The court heard arguments on the AGF’s preliminary objection on 26 March 2019. At the time, the AGF requested that MTN’s lawsuit be dismissed because it was not filed within the appropriate timeframe, which the  AGF asserted was within three months of receipt of the initial request for a self-assessment.

“Having considered  the matter, the judge determined that MTN’s lawsuit was not statute-barred, as the company was only required to file its case within three months of receipt of the actual demand notice in August, which it did.

“The Federal High Court delivered its ruling on 7 May 2019, rejecting the notice of preliminary objection filed by the AGF  in response to MTN’s lawsuit to have the AGF’s demand for circa US$2 billion dismissed.

“We remain resolute that MTN Nigeria has not committed any offence and will continue to defend this position. Court was adjourned to 26 June 2019 for the trial of the substantive case,” MTN said.

Shares in the mobile operator have shown strong growth in recent weeks, bouncing back from legal and regulatory troubles in Nigeria in recent years.

Read: MTN Nigeria is said to consider Lagos share listing next week

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MTN South Africa service revenue grows, but subscribers fall