MTN South Africa loses subscribers in challenging trading conditions

Mobile operator MTN reported a decline in South African subscribers in a quarterly update for the period ended September 2019, citing challenging trading conditions.

Group subscribers, however, increased quarter-on-quarter (QoQ) by 3.5 million to 243.7 million, while active data subscribers increased QoQ by 4.7 million to 87 million, it said.

Group service revenue increased year-on-year (YoY) by 9.6%, boosted by operations in Nigeria (up 12.1%), however, MTN South Africa service revenue increased by only 0.4%.

Active MTN Mobile Money customers increased QoQ by 2.2 million to 31.7 million, MTN said.

“MTN grew service revenue and EBITDA in the third quarter, despite challenging trading conditions. This was supported by solid commercial momentum and operational execution in most of our markets,” said MTN group president and chief executive officer, Rob Shuter.

The group benefited from strong performances in Nigeria and Ghana, which generated double-digit service revenue growth and improved EBITDA margins, the operator said.

The performance of MTN South Africa continued to be impacted by a weak economy, the implementation of lower out-of-bundle data prices, new data usage rules and unrecognised roaming revenue from Cell C.

“MTN SA continues to account for Cell C roaming revenue on a cash basis, and payments received since June 2019 have remained on schedule. A change in the accounting treatment back to recognising revenue on an accrual accounting methodology will occur upon adequate resolution of Cell C’s liquidity challenges,” it said.

“Across the group, we are on track with delivering our strategy. This is reflected in ongoing voice, data and fintech revenue growth of 4.4%, 21.5% and 30.9% respectively.

“Digital revenue declined by 46.4% as we continued to optimise our legacy value-added services (VAS) business. In Nigeria we have achieved a return to positive QoQ digital revenue growth following completion of the VAS optimisation in that market,” said Shuter.

He said that MTN recorded 515,000 monthly active users on its Ayoba messaging platform, now launched in five markets namely South Africa, Uganda, Ivory Coast, Cameroon and Congo Brazzaville.

MTN South Africa

MTN South Africa recorded service revenue growth of 0.4% in difficult trading conditions.

“If an accrual basis of accounting was applied to Cell C roaming revenue, MTN South Africa would have recorded service revenue growth of 3.5%,” the group said.

Overall subscribers reduced slightly by 300,000 QoQ, ending the quarter with a base of 28.9 million.

MTN said that service revenue growth was negatively affected by a 4.6% YoY decline in consumer prepaid service revenue for the nine months to September 2019.

This was impacted by out-of-bundle (OOB) data tariff reductions and ICASA’s End-User Subscriber Service Charter regulations (which came into effect on 1 March 2019) against the backdrop of a challenging economic environment.

“The trend in consumer prepaid revenue in the September 2019 quarter was encouraging, with the decline in the three months moderating to 2.7% YoY compared to a 5.1% YoY decline in the three months to June 2019. We remain focused on returning to growth, supported by stabilising trends in voice and improvements in data,” MTN said.

In the third quarter, data revenue showed encouraging YoY momentum with a return to positive growth recorded compared to a YoY decline in the second quarter ended June 2019, it added.

“We discontinued the 1 GB acquisition promotion in prepaid, targeting distribution efficiencies, and this resulted in a 0.4 million QoQ reduction in subscribers in the quarter to a closing base of around 23 million. We anticipate a normalisation of the base and customer profile by the first half of 2020,” it said.

The consumer postpaid business delivered service revenue growth of 5.8% YoY in a highly competitive market.

“Net subscriber additions of 80,620 QoQ were relatively muted, reflecting the tough trading environment and lower acquisition volumes as we continued to implement stricter vetting rules aimed at reducing credit risk and enhancing subscriber quality. We recorded positive momentum in postpaid data traffic, which increased by nearly 31% YoY in the nine months to September 2019,” MTN said.

MTN said that Cell C has fulfilled all its commitments in line with the revised payment plan agreed after MTN’s interim period-end. “We remain in discussion with Cell C regarding a revised roaming agreement,” it said.


Read: MTN says it is committed to Cell C

Latest news

Partner Content

Show comments

Follow us

Recommended

MTN South Africa loses subscribers in challenging trading conditions