Cellular7.08.2014

MTN SA revenue takes a knock

mobile operator punch fight MTN Cell C Vodacom Telkom

MTN has reported a 7% fall in revenue for its South African operation to R19 billion in interim financial results for the six months ended June 2014, amid increasing competition.

Market share declined by 2.7 percentage points to 31.9% as competition intensified in the pre-paid segment, the group said of its SA operation.

During the first quarter of 2014, the operation’s subscriber base contracted by 825,000
subscribers and during the second quarter added 394,000 to reach 25.3 million subscribers at period-end.

Group subscribers however, climbed 3.5% to 215 million, while revenue increased by 10.7% to R72.8 billion.

Operating profit climbed to R23 billion, from R20 billion in 2013.

South Africa

“MTN South Africa showed resilience in the face of significant market and operational challenges,” MTN said.

EBITDA declined to R6.4 billion, from R6.9 billion.

The improvement in subscriber growth was largely a result of focused and targeted promotions to the pre-paid segment, which included the introduction of the widely successful “79 cents per minute” price plan, MTN said.

Despite improvements, however, the group said its pre-paid subscriber base declined by 4.3%, bringing the total pre-paid segment to 19.8 million.

The post-paid segment (excluding telemetry SIMs) increased by 4.6% to 3.5 million. “We expect a return to normalised growth in revenue and subscribers over the next 6 months,” the operator said.

MTN attributed a fall in revenue, mainly due to lower outgoing voice revenue, which declined by 8.6% to R8.5 billion. Incoming voice revenue declined by 30.4% as the impact of the mobile termination rates (MTR) reduction took effect during the second quarter.

Data revenue, including MTN Business, increased by 13.7% to R4.5 billion and contributed 23.4% to total revenue.

“This was a satisfactory result despite a decrease of 38,1% in the average price per megabyte given the aggressive price competition. Increased 3G coverage and competitive data bundles were the main contributors to this growth,” MTN said.

The number of data users increased by 2.7% to 14.7 million and the operation had 5.3 million active smartphones on its network.

“We continue to review our cost structures, including employee costs, to ensure better alignment with revenue performance,” MTN said.

During the period, the group added 220 new 2G sites and 400 co-located 3G sites, taking 3G population coverage to 83.9% at the period end.

MTN International

Reported revenue for the six months increased by 10.7%, supported by the continued weakness of the South African rand against other operating currencies, in particular the relatively stronger Nigerian naira, Central African franc and Ugandan shilling.

MTN said its large opco cluster delivered pleasing results in line with
guidance, growing revenue by 13.4%, with encouraging growth reported by operations in Ghana, Cameroon and Sudan.

The small opco cluster delivered a modest 5.7% increase in revenue as conditions in Guinea Conakry, Liberia and Yemen remained challenging, MTN said.

Capital expenditure for the period of R9.2 billion reflected a decrease of 28.1% from the
same period in 2013. More than two thirds of the full year’s capex budget has been committed, the group said.

Looking ahead, MTN said it has made substantial progress on many of its strategic themes over the period.

“We continue to explore opportunities to expand our product offering outside of traditional voice and expect to increase our presence in the digital space by leveraging technology and maximising the opportunity of low internet penetration in many of our markets,” MTN said.

“We will continue to explore value-accretive M&A opportunities in line with our strategy,” it said.

This article was first published on BusinessTech.