Why MTN increased its prices
MTN has released its group interim financial results for the six months ended 30 June 2016, which showed a decline in its EBITDA (earnings before interest, taxes, depreciation and amortization) margin of 5.5% in South Africa.
The results further showed a 2.6% decline in subscriber numbers for its local operations, and a 6.1% decline in outgoing voice revenue.
The MTN group reported a headline loss per share of 271 cents – the first time the company has reported a loss since being listed.
These numbers place significant pressure on management to turn the company’s financial fortunes around.
It is therefore not surprising that MTN South Africa introduced significant price hikes and big decreases in value across many of its contract packages in the build up to its results announcement.
MTN also recently increased its default prepaid call rate from 79c to R1.50 per minute, after introducing a new default plan for MTN PayAsYouGo users called MTN Base.
MTN’s official position is that it revised its pricing and package structures to “ensure that it remains relevant and competitive”.
The feedback from MTN subscribers about the decreased value and higher prices was less than complimentary towards the company.
“I’m confused. How do hiking prices keep them relevant and competitive?” said one consumer.
“MTN needs to up their revenue to pay the Nigerian fine, following their willful disobedience in the Nigerian market. Answer: Hike your prices and fleece another market,” said another.
MTN was asked for comment regarding its recent price increases, but the company did not respond by the time of publication.
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