MTN South Africa picks up subscribers amid sustained turnaround

Mobile operator MTN said in a quarterly update for the period ended September 2020, that total subscribers in South Africa increased by 1.9 million, to 30.9 million.

The majority of additions were prepaid customers, reaching a total of 24.3 million, and marking the largest quarterly increase in nearly 18 months.

Postpaid subscriber numbers remained broadly flat at 6.6 million, primarily as a result of churn on short-term Covid-19 related deals, it said. Excluding the net impact of these deals, the postpaid subscriber base increased 168,100 for the quarter.

Strong data traffic growth of 80.6% coupled with a 500,000 increase in active data users to 14.7 million supported a 16% increase in overall mobile data revenue. MTN said it has reduced its effective data tariff by approximately 34.7% since September 2019.

Salient features

  • Group subscribers increased by 12 million to 273.4 million
  • Active data subscribers increased by 5.3 million to 107.2 million
  • Active MTN Mobile Money (MoMo) customers increased by 3.5 million to 41.8 million
  • Group service revenue increased by 11.4%
  • Group earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved to 43.3% from 41.9%
  • MTN South Africa service revenue increased by 2.1%, with an EBITDA margin of 39.3% from 36.6%

“As the Covid-19 pandemic has continued to impact lives and livelihoods across our markets, the group has demonstrated strong operational execution and resilience during the period under review.

“Although trading conditions remain challenging, we delivered a solid performance in Q3 2020 during which the positive momentum achieved in key traffic and revenue trends towards the end of H1 2020 was sustained,” said group president and chief executive officer, Ralph Mupita.

“We continued to drive good growth in our subscriber base, enabled by strong commercial execution across our markets. In the quarter we added 12 million subscribers and 5.3 million active data users.

“As lockdown restrictions interrupted new network rollout, particularly in Q2, we continued to focus our investment of R16.1 billion on network capacity and resilience and modernising our IT systems. Pleasingly, we were able to accelerate some of our investment as lockdown restrictions eased,” Mupita said.

MTN South Africa sustained its turnaround, with an acceleration in its core consumer and enterprise business units in Q3, the chief executive said.

“We recorded solid growth in voice revenue of 3.9%, which reflects an encouraging recovery supported by the easing of lockdown restrictions and the gradual reopening of the economies in our markets.”

Data revenue grew by 31.9%, bolstered by increased demand for work from home services, digital entertainment as well as online education offerings. Fintech and digital revenue grew 21% and 37.5% respectively, driven by increased adoption and usage of our digital channels and offerings.

“Our balance sheet and liquidity position is supported by our focus on prudent capital allocation,” Mupita said.

MTN SA delivered service revenue growth of 2.1% with an improved performance in Q3, when it increased by 11.8% YoY.

Service revenue growth was supported by the strong performance in the consumer prepaid business, continued growth of the enterprise business and the resilience of the consumer postpaid business. All three business units continue to benefit from the growth in data usage driving the increase in data revenue by 16% YoY in the nine months to September 2020, MTN said.

MTN SA’s results were negatively impacted by the discontinuation of its roaming agreement with Telkom which concluded in June 2019 and the effect of accounting for Cell C roaming revenue on a cash basis.

Excluding the impact of national roaming, MTN SA would have recorded service revenue growth of 3.4% in the first nine months of the year and 5.7% YoY in Q3, the group said.

Wholesale revenue declined by 14.4%, impacted by the lost national roaming revenue from the discontinuation of the agreement with Telkom and the effect of continuing to account for Cell C revenue on a cash basis.

MTN SA recognised approximately R1.3 billion in national roaming revenue in the nine months to September 2020 (taking into consideration that no Cell C revenue was recognised in Q3 2019), while R698 million of Cell C revenue remained unrecognised as at September 2020.

The implementation continues of Phase 2 of the Cell C roaming agreement, which commenced on 1 May 2020.

Since launching MoMo in South Africa in January 2020, this service continues to scale, with approximately 2 million registered users at 30 September 2020. “The focus remains on growing the platform through innovative and relevant service offerings,” MTN said.

Since launching MTN 5G in June, MTN SA continued to deliver 5G connectivity with more than 100 sites and across multiple spectrum bands.

Read: MTN launches MVNO service

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MTN South Africa picks up subscribers amid sustained turnaround