How MTN calculates its contract subscribers in South Africa

MTN recently presented its interim financial results, outlining its finances for the six months ended 30 June 2019.

These results reflect a few interesting figures – most notably the mobile operator’s subscriber numbers and its service revenue in South Africa.

MTN South Africa’s figures showed that it had 5.9 million postpaid (contract) subscribers and 23.3 million prepaid subscribers.

This is on par with Vodacom in the contract customer space, which had 5.9 million postpaid subscribers and 37.9 million prepaid customers as of 30 June 2019.

There is a difference in how these companies report their subscribers, however, as MTN includes telemetry subscribers in this figure.

Reporting subscribers

Financial results include data sheets which show a number of important figures, such as average revenue per user (ARPU), subscriber numbers, and data revenue.

Postpaid customers are far superior to prepaid in terms of the income they bring in for mobile operators, and as such, the ARPU reflections for this subscriber base are an important measure of the company’s revenue from its contract customers.

MTN’s results include separate ARPU figures for postpaid subscribers and for “postpaid (excluding telemetry)”.

Telemetry subscribers refer to SIMs which are used in various tracking, monitoring, and low-data devices, and for this reason, the average revenue per telemetry subscriber is relatively low.

At a previous Vodacom results presentation, MyBroadband asked the company’s CEO, Shameel Joosub, whether Vodacom included telemetry customers within its postpaid subscriber figures.

Joosub said that Vodacom declared its telemetry subscriber figures separately and that its postpaid subscriber numbers reflected consumer contract customers.

Therefore, while MTN’s financial reports reflect a similar number of postpaid subscribers as Vodacom, it is important to note that these also include telemetry customers

Consumer vs telemetry figures

To find the comparative number of MTN consumer contract subscribers, we needed to determine the number of telemetry customers on MTN’s network.

This figure is not reflected under the Subscribers section in the company’s data sheets, but is shown in a separate section at the end of the results which also includes the company’s market share in its various operating regions. South Africa is the only region with a telemetry subscriber base listed in this section.

By subtracting the telemetry figure from MTN’s postpaid subscriber numbers, we can find the company’s actual contract subscriber numbers in South Africa.

We listed the telemetry and postpaid subscriber numbers for MTN South Africa for both the year ended 31 December 2018 and the six months ended 30 June 2019.

Below are the postpaid and telemetry subscriber figures for MTN South Africa, along with screenshots from MTN’s results presentation:

Period Telemetry Postpaid Combined
31 December 2018 2.9 million 2.9 million 5.8 million
30 June 2019 3.2 million 2.7 million 5.9 million

MTN financial report postpaid

Growth claims and revenue

These figures reflect an increase of 300,000 telemetry subscribers and a decrease of 200,000 non-telemetry postpaid subscribers over the first six months of 2019.

Due to the way MTN reflects its postpaid subscribers in its financial reporting (by combining telemetry devices and human customers), the figures show an increase in the total contract customers.

Speaking in an interview with Business Day about MTN’s South African business, MTN Group CEO Rob Shuter stated the following: “We are seeing growth in the consumer postpaid business. There is no reason why we cannot also compete more effectively in time in prepaid.”

The growth Shuter is referring to here is attributed to postpaid consumer revenue growth of 7% and does not refer to non-telemetry contract subscriber numbers.

While growth in telemetry subscribers is beneficial to any operator, the revenue generated by these SIMs is nowhere near the income earned from human contract customers.

Rob Shuter
MTN Group CEO Rob Shuter

Standard postpaid decline

MyBroadband asked MTN South Africa for comment on its postpaid subscriber reporting practices.

The MTN Group Investor Relations supplied the following feedback:

“MTN’s interim results for the period ended 30 June 2019 reflected 5.9 million postpaid customers in South Africa, comprising 3.2 million telemetry subscribers and 2.7 million standard postpaid subscribers.

MTN’s results for the year ended 31 December 2018, the company had 5.8 million postpaid customers in South Africa, comprising 2.9 million telemetry subscribers and 2.9 million standard postpaid customers.”

Credit risk

MTN SA executive for corporate affairs Jacqui O’Sullivan told MyBroadband that the company provides ARPUs excluding telemetry.

“The ARPU for telemetry subscribers is R153 for Q1 2019,” O’Sullivan said.

“We have seen a slight decrease in non-telemetry postpaid on the back of stricter vetting rules targeting a reduction in credit risk due to tougher economic times,” she added.

O’Sullivan added that MTN SA’s consumer postpaid subscribers include a “small element” of consumer-held telemetry subscribers. “Consumer postpaid revenue grew by 7% for H1 2019,” she said.

“Consumer postpaid subscriber net additions were muted on the back of stricter vetting rules targeting a reduction in credit risk due to tougher economic times.”

Now read: MTN and Vodacom are bleeding subscribers

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How MTN calculates its contract subscribers in South Africa