MTN hit by strike action and a weaker rand

MTN on Wednesday (5 August), reported a decline in revenue both locally, and at a group level, for the six months ended June 215, citing a challenging operating environment and
lower than expected performance in parts of the business.

MTN South Africa’s performance was hampered by handset supply chain challenges and industrial strike action during the period, it said.

The strike took place between 20 May 2015 and 16 July 2015.

“Despite this, the operation continued to show encouraging growth in service revenue, driven mainly by data revenue,” MTN said.

MTN South Africa reported a 1.4% decline in revenue to R18.9 billion, due to a 27.5% reduction in handset revenue, “although management expects this to improve in the second half supported by the changes in the logistics process'”.

The operation increased its subscriber base by 1.8% to 28.5 million.

The number of smartphones on MTN’s network increased by 9.1% to 5.8 million, and the number of data users increased by 18.1% to 17.3 million. Growth in smartphones
and data users was constrained by low handset availability.

Group revenue declined by 4.9% to R69 billion. Movements in the majority of the group’s
operational currencies against the rand negatively impacted performance, MTN said.

Group operating profit slipped to R19.9 billion, from R22.9 billion before, while headline earnings per share decreased 10.3% to 654 cents.

EBITDA decreased by 10.1% to R30 billion, it said.

MTN said it remains well positioned in a rapidly evolving market, growing its subscriber base by 3.4% to 231,0 million.

Dividends declared at the board meeting held on 4 August 2015 amounted to 480 cents per share.

Capital expenditure (capex) was R10.85 billion, 18% higher than the previous period, the operator said.

MTN said it continued to focus on improving network quality, increasing capacity and expanding the footprint of our 3G, LTE and fibre networks.

During the period, the group’s operations rolled out 1,335 2G, 5,048 largely co-located 3G and 2,475 LTE sites as well as 722km of long distance fibre.

Looking ahead, MTN said it would focus on building staff engagement and improving customer service in the South African operation in the second half of the year, following a prolonged strike.

The operation will also accelerate its capex plans to support medium term growth prospects, particularly in the data area. Corrective measures have been implemented to improve handset sales, MTN said.

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MTN hit by strike action and a weaker rand