Why MTN lost 2 million prepaid customers

MTN has published its interim results for the period ended 30 June 2019, detailing its revenue growth and subscriber numbers in South Africa.

Speaking at the company’s results presentation in Johannesburg, Group CEO Rob Shuter said that the company has seen difficult trading conditions in South Africa.

MTN lost two million prepaid subscribers over the period, with the number of postpaid subscribers increasing by 100,000. This leaves MTN with a total subscriber base of 29.2 million in South Africa.

Shuter said this subscriber loss was due to a number of factors, including adjustments to out-of-bundle data pricing required by ICASA regulations, as well as the country’s overall economic environment.

“We have had a challenging first half in South Africa,” Shuter said. “We had our famous 1GB promotion, which we decided was not generating value and we pulled it out of the market.”

“A lot of those SIMs have since become dormant and contributed to the drop in prepaid users,” he said.

WASP income falling

Shuter added that MTN has also seen a large reduction in revenue from value-added services, with the group’s digital revenue decreasing by 42.5% to R1.4 billion in the first half of 2019.

These include content services which charge subscribers a daily or weekly fee in exchange for various services or access to entertainment content.

Many mobile subscribers previously reported being signed up to these services without their consent, and MTN has since implemented a number of anti-fraud mechanisms and double opt-in requirements to help combat this issue.

“Legacy value-added services are fading out of our business,” Shuter said. “The transition from feature phones to smartphones is going to continue eroding that VAS business.”

Shuter added that MTN was now focusing on building its new digital business, which includes the roll-out of its Ayoba messaging platform, which integrates payments and SMS messaging to provide greater value for MTN customers.

Ayoba has launched in three of MTN’s markets and currently has around 300,000 active monthly users.

“We have made a lot of enhancements to Ayoba. It has got instant messaging, image transfers, emoticons, channels, and we are going to integrate payments,” Shuter said.

“There is a big play going on there and we will have some fantastic news on that for the full-year results.”

Rob Shuter 2019 results
MTN CEO Rob Shuter

Now read: MTN South Africa – Increase in revenue, but drop in subscribers

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Why MTN lost 2 million prepaid customers