We are under pressure in SA: MTN

 ·27 May 2014

MTN Group’s South African operation remains under pressure as it ensures its market offerings are attractive in a highly competitive data and voice market.

This is the message that MTN Group President and CEO, Sifiso Dabengwa delivered at the group’s annual general meeting on Tuesday (27 May, 2014).

Dabengwa said that MTN South Africa has experienced negative revenue growth for the first four months of 2014, when compared to the same period last year.

“This was due to the reduction in retail rates and the 1 April 2014 reduction in interconnect rates,” he said.

“This trend is expected to continue for at least the next two quarters reflecting the adjustments made to retail tariffs. Data revenue remains the largest contributor to revenue growth with 14.5 million data users on the network,” he said.

MTN South Africa’s earnings before interest, tax, depreciation and amortisation (ebitda) margin declined marginally largely due to lower outgoing voice revenue, a reduction in interconnect revenue and higher rent and utilities costs, the group said.

In April, MTN reported that its South African operation reduced subscriber numbers by 824,768, bringing total subscribers to 24.9 million for the period ended March 2014.

Rival operator, Cell C, meanwhile, said it signed up a record 1.6 million new subscribers in March 2014, taking its total subscriber base to 16.6 million.

Cell C said it had 13.6 million subscribers by the end of 2013, with a net addition of 3.5 million users during the year.

Vodacom meanwhile, reported a return to growth for its SA operations for the year ended March 2014, while group active customers increased 13.8% to 57.5 million, with 7.0 million net connections in the year.

Sifiso Dabengwa

Sifiso Dabengwa

The group, however, increased its subscriber base by 2% for the four months to 30 April 2014.

In April, MTN reported that overall group subscriber numbers advanced marginally, 1.1%, to 210 million for the period ended March 2014.

The increase in subscribers was mainly attributable to MTN Nigeria´s strong uptake of
subscribers in April 2014 following the removal of the SIM sale ban imposed in March 2014.

MTN Nigeria added 1.1 million subscribers during the month of April 2014. “Satisfactory
subscriber growth in the large opco cluster also contributed to this growth,” Dabengwa said.

The combined group achieved double digit revenue growth, in rand terms, for the four
month period compared with the corresponding period for 2013.

This was positively impacted by a weaker rand against the USD and a strong overall performance from the large opco cluster.

“MTN Nigeria delivered solid local currency growth in line with expectations despite the SIM sale ban in March.

“Iran, Ghana, Cameroon, Uganda, Syria and Sudan recorded healthy revenue growth for the period compared to 2013,” Dabengwa said.

Data revenue continued to deliver satisfactory growth in most markets, increasing 43% year-on-year (YoY) and now contributes 17% to total revenue compared to 14% for the same period last year.

Looking ahead, MTN said that while the operating environment remains challenging with persistent price competition and regulatory challenges in key markets, “the group remains focused on improving its performance and delivering on its strategy”.

“Growing data services and Mobile Money are key areas of focus for the Group as traditional voice revenue remains under pressure,” Dabengwa said.

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