{"id":48399,"date":"2013-10-27T23:55:40","date_gmt":"2013-10-27T21:55:40","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=48399"},"modified":"2013-10-28T09:21:47","modified_gmt":"2013-10-28T07:21:47","slug":"reason-for-concern-at-mtn","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/48399\/reason-for-concern-at-mtn\/","title":{"rendered":"Reason for concern at MTN?"},"content":{"rendered":"

MTN<\/a>‘s latest numbers would suggest reason for concern – particularly over its operation in South Africa; however two analysts provide\u00a0differing\u00a0opinions of how the group may progress in the medium-term.<\/p>\n

Last week, MTN said that it only grew its total subscriber base by 1.1% to 203.8 million in a quarterly update for the nine-month period ended September 2013, from 201.5 million in the prior quarter, and from 195.4 million in Q1.<\/p>\n

MTN Group President and CEO,\u00a0Sifiso Dabengwa<\/a>\u00a0said: \u201cThe third quarter has been characterised by lower than anticipated subscriber growth following ongoing price competition and subscriber registration requirements across a number of markets.<\/p>\n

For MTN South Africa,\u00a0revenue growth declined, (YoY) mainly due to lower effective voice tariffs and slower subscriber growth, the group said.<\/p>\n

Nadim Mohamed<\/a>, an investment analyst and partner at\u00a0First Avenue Investment Management<\/a>\u00a0said: “There were two contrasting\u00a0signals that I read into the MTN results.\u00a0 Firstly, Nigeria looks to be recovering from last year with about 10.4% revenue growth YoY \u2013 however, quarter on quarter subscriber growth was flat and ARPU was down.”<\/p>\n

MTN Nigeria grew subscribers marginally (0.6%) to 55.6 million.<\/p>\n

“Secondly, it confirmed strongly for me that the SA market is going to be in decline due to pricing pressure and regulatory intervention \u2013 and this will intensify with the next round of MTR cuts,” Mohamed said.<\/p>\n

The analyst believes that MTN needs a sizable acquisition to resume the growth path that it has been on over the past few years.<\/p>\n

“Almost every market they\u2019re in is experiencing some level of maturity or strong regulatory action \u2013 the result is slower growth [and] an inability to maintain high prices,” he said.<\/p>\n

Mohamed said that\u00a0MTRs are a very difficult pill to swallow for the larger operators.<\/p>\n

“It forces them to lower pricing for both on-net and off-net calls as smaller operators often pass on the MTR benefit to the consumer.\u00a0 The reduction of on-net rates are painful due to the high profitability of this revenue stream.”<\/p>\n

He said that Nigeria in particular will be interesting to watch as the regulator introduced a new round of MTR cuts just a few months ago, “and we have seen no pricing action by smaller operators as yet”.<\/p>\n

“Data is also not growing as fast as I thought it would at 34.7% – perhaps it will accelerator as smartphone penetration increases in the African operations.\u00a0 However, from watching other international operators, I find that data does not have the same \u2018network effect\u2019 as voice and is more prone to commoditization than voice,”\u00a0Mohamed said.<\/p>\n

“In my view, it will be tough going next year for MTN and Vodacom<\/a>.\u00a0 MTN is particularly dependent on a strong recovery in Nigeria \u2013 in addition, their results will be influenced a lot by exchange rate movements which have been quite volatile recently.”<\/p>\n

He noted that enterprise is an additional revenue stream for MTN, adding that its still early days on that front.<\/p>\n

Another view<\/h3>\n

Paul Theron<\/a>, CEO of\u00a0Vestact<\/a>\u00a0paints a\u00a0different\u00a0picture for MTN.<\/p>\n

“Data sales are strong, and Iran sanctions potentially being eased. That’s enough to offset the negatives around competition, MTRs and regulatory snaggles in Nigeria,” the analyst said.<\/p>\n

\n

“The margins on data sales to wealthier clients in well-served areas (4G) seem to be fine. That’s the experience in US markets, anyway,” Theron said.<\/p>\n

Despite declining in trade on Friday, shares in MTN have advanced since January, adding 11.3%, and 30% over the past year.<\/p>\n<\/div>\n

More news on MTN<\/h3>\n

MTN subscriber growth slows<\/strong><\/a><\/p>\n

Who is SA\u2019s mobile ARPU king?<\/strong><\/a><\/p>\n

MTR price cuts: how it will affect Vodacom and MTN<\/strong><\/a><\/p>\n

Vodacom: the good and the not so good<\/strong><\/a><\/p>\n

Price wars could lead to market failure: MTN<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

MTN’s latest numbers would suggest reason for concern, particularly over its operation in South Africa, however two analysts provide differing opinions of how the group may progress in the medium term.<\/p>\n","protected":false},"author":10,"featured_media":44251,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[2160,26,28,3757,5141,1890,5142,27],"class_list":["post-48399","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-first-avenue-investment-management","tag-headline","tag-mtn","tag-nadim-mohamed","tag-paul-theron","tag-sifiso-dabengwa","tag-vestact","tag-vodacom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/48399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=48399"}],"version-history":[{"count":10,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/48399\/revisions"}],"predecessor-version":[{"id":48449,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/48399\/revisions\/48449"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/44251"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=48399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=48399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=48399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}