MTN expects 20% hit on interconnect revenue

MTN (MTN) SA MD, Karel Pienaar, said that the group is expecting a 20% decline in interconnect revenue for 2012.

The latest round of interconnect rate cuts kicked in on March 1, 2012, with peak mobile termination rates (MTR) down from R0.73, to R0.56 per minute; and off-peak mobile termination rates down from R0.65, to R0.52 per minute.

In reporting its annual results on Wednesday (March 7, 2012), MTN Group noted that interconnect revenue declined 9.8% for its SA operation, following the reduction of mobile termination rates to 73 cents, from 89 cents in March 2011.

Average revenue per user per month (ARPU) reduced 12%, primarily due to lower interconnect revenue, the company said.

“It’s going to be bigger (than 2011). If you look at the past year, it’s been about 10%. Effectively, if you look at the percentage, it should be double that. It is a lot. We have to work very hard to make up that revenue. We have done so far and we hope to maintain that,” Pienaar told BusinessTech.

He pointed specifically to continued growth in its data provisions, along with a rise in customers.

MTN announced strong growth in data revenue, which was up 27.7% (excluding SMSes).
Data, including SMS, now accounts for 21.4% of revenue in SA – up from 19% in 2010, and 14.8% in 2009. Data excluding SMS accounts for 12% of revenue, it said.

SA contributes 57.4% and 35.2% to group data and SMS revenue, respectively, and remains the largest driver of growth in data services.

The group grew its subscriber base by 16.2% to 164.5 million with 22 million based in South Africa.

MTN said it hoped to add 20.3 million subscribers in 2012, including 2.9 million in SA, and four million each in Nigeria and Iran.

Vodacom said that the reduction in MTR rates would have an impact on its bottom-line, but would not provide a specific guidance on the amount.

Cell C, meanwhile, only noted that it had also lowered its rates according to call termination rate regulations.

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MTN expects 20% hit on interconnect revenue