MTN South Africa sees drop in subscribers in tough economy

MTN Group on Thursday (8 August) reported financial results for the six months ended June 2019 showing revenue increased by 10.2% and service revenue increased by 9.7% to R67.9 billion, supported by growth in Nigeria (up 12.2%), and South Africa (up 3.3%).

Growth in MTN South Africa was impacted by a decline in consumer prepaid revenue following the implementation of new rules and the reduction of out-of-bundle tariffs, as well as lower revenue from Cell C, MTN said.

The group also reported a drop in local subscribers in a tough economic climate.

Reported headline earnings per share (HEPS) were 195 cents from 215 cents in June 2018. HEPS were negatively impacted the Nigeria fine interest; hyperinflation; the impact of foreign exchange gains and losses; and divestments.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) expanded by 10.2% to R31.2 billion.

Highlights

  • Subscribers increased by 7.7 million to 240 million from 31 December 2018;
  • EBITDA margin improved to 35.2%;
  • Reported group EPS at 247 cents per share, up 17.2%;
  • Interim dividend of 195 cents per share in line with guidance, up 11.4%.

Commenting on the results, Rob Shuter, MTN Group president and CEO, said: “We had a good first half, reporting solid financial results, good commercial momentum and encouraging strategic progress.

“We saw growth of 12% in adjusted headline earnings per share, which is the first time that we have delivered growth in this measure in recent years.”

“The number of active data users grew by 3.5 million to 82 million and our 30-day active Mobile Money users grew by 2.4 million to 30 million.”

“During the period we had some landmark events. We successfully completed the listing of MTN Nigeria on the Nigerian Stock Exchange and our e-commerce joint venture Jumia listed on the New York Stock Exchange.”

“Our advanced instant messaging platform, Ayoba, is now live in three of our West African markets and has more than 300 000 active monthly users. We are very pleased with the formal approval of our super-agent licence in Nigeria, which clears the way for the launch of phase 1 of our Nigeria fintech business while we await a banking licence.”

South Africa

MTN South Africa

  • Service revenue increased by 3.3%;
  • Data revenue increased by 5.6%;
  • Fintech revenue increased by 21.6%;
  • Digital revenue decreased by 34.5%;
  • EBITDA increased by 0.2% to R7 462 million.

MTN South Africa reported improved service revenue in the period. Growth in wholesale and consumer postpaid revenue supported service revenue growth but was offset by a 5.5% reduction in prepaid service revenue coupled by the Cell C adjustments made, it said.

The prepaid business negatively impacted service revenue growth mainly as a result of the implementation of ICASA’s End-User Subscriber Service Charter regulations and the reduction of out-of-bundle (OOB) tariffs on data services, as well as the impact on consumer spending of the contraction of the economy.

The consumer postpaid business remained resilient in tough conditions delivering a 7% service revenue growth.

“Consumer additions were muted on the back of stricter vetting rules targeting a reduction in credit risk due to tougher economic times,” MTN said.

It said that a combination of changes in the acquisition strategy in consumer postpaid as well as the discontinuation of the 1GB acquisition promotion in prepaid in order to drive distribution efficiencies resulted in a 1.9 million decrease in the subscriber base from December 2018 to a closing subscriber base of 29.2 million.

“We continued to execute on the turnaround of the enterprise business, leading to lower service revenue reductions of -7,8% from -11,3% in the 2018 full year as we stabilised churn and added new corporate customers.

“We are confident that this trend will gain further traction in the second half of the year,” it said.

MTN South Africa increased the distribution of 3G and 4G devices by 22% as enablers of future data growth. Operating expenses were impacted by a number of external factors such as load shedding, battery  theft and site vandalisation, the operator said.

These, together with the progressively expanding network footprint, resulted in a 3.7% increase in total costs YoY.

Looking ahead, Shuter said: “MTN is well-positioned to grow by leveraging our scale and enhancing our competitive position.

In the second half, in South Africa we will focus on the continued turnaround of the enterprise business, the recovery of prepaid and the launch of Mobile Money.”


Read: MTN is losing millions of rands to battery thieves

Latest news

Partner Content

Show comments

Follow us

Recommended

MTN South Africa sees drop in subscribers in tough economy