Big drop in MTN South Africa wholesale revenue

MTN has published its quarterly trading update for the period ended 31 March 2020, showing a significant drop in wholesale revenue for the company’s South African business.

Wholesale revenue declined by 44% year-on-year, which MTN said was largely attributed to the loss of the Telkom roaming agreement and the effects of lower recognised revenue from Cell C.

“This resulted from our roaming agreement with Telkom having concluded at the end of June 2019 as well as lower revenue recognised from Cell C due to the ongoing cash basis of accounting,” MTN said.

“For Cell C specifically, roaming revenue continued to be accounted for on a cash basis in line with IFRS 15 and MTN SA recognised approximately R292 million in revenue during the quarter.”

MTN said that as of 31 March 2020, R450 million in Cell C revenue remained unrecognised.

MTN added that it had commenced phase two of its expanded roaming agreement with Cell C, effective 1 May 2020.

“MTN South Africa’s (MTN SA) performance was negatively impacted by the wholesale business, as we continue to account for Cell C roaming revenue on a cash basis, as well as the loss of revenue from the Telkom roaming agreement which came to an end in June 2019,” said MTN Group CEO Rob Shuter.

MTN added that that the first-quarter performance of its South African business was impacted by the global outbreak of the COVID-19 pandemic, currency depreciation, and load-shedding.

MTN South Africa

MTN South Africa noted that its prepaid business has begun to recover from recent regulation changes, and its postpaid customer base has seen an increase despite the economic environment.

The company recorded a quarterly increase of 75,000 subscribers in South Africa.

Service revenue for its South African business declined by 6.2%, which the company attributed to the effects of its Cell C roaming agreement and the loss of the Telkom roaming agreement.

The company said that if the effect of national roaming agreements was discounted, the quarterly service revenue for its South African operations would have remained flat.

“We are encouraged by the stabilisation of the consumer prepaid business which was affected by the implementation of the new out-of-bundle data usage rules,” Shuter said.

“Also pleasing was the continued progress in the enterprise business, which recorded 8.2% service revenue growth.”

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Big drop in MTN South Africa wholesale revenue