MTN pumps R6.6 billion into South African network

MTN South Africa has invested R6.6 billion into its network during the last quarter for additional capacity and resilience in the face of load-shedding.

South Africa’s second-largest mobile network operator reported its results for the period 1 July to 30 September 2023 on Tuesday.

“Power outages in South Africa continued to be a challenge in the period, however, the significant progress made in our network resilience programme — which is tracking slightly ahead of plan — combined with lower load-shedding in Q3 (compared to H1), has supported average network availability of above 95%,” said MTN Group CEO Ralph Mupita.

MTN’s financial performance was under pressure, with the company reporting a 2.2% increase in revenue to R12.7 billion, while service revenue increased 2.6% to R10.6 billion.

Earnings before interest, taxation, depreciation, and amortisation (Ebitda) was down 6.9% year-on-year (YoY), including the once-off gain on the disposal of SA towers.

Excluding this effect, Ebitda declined by 5.7%.

“This was impacted by topline pressures, the revised management fee, as well as higher power and other network resilience-related costs,” the company stated.

“MTN SA continues to execute on its aggressive cost drive to safeguard profitability and cash flows, underpinned by the expense efficiency programme.”

MTN said that data remained the primary catalyst of growth in the business, as mobile data revenue increased by 8.3% YoY.

Data made up 47.9% of MTN SA’s service revenue year-to-date.

“This achievement was made possible by a 3.4% increase in active data subscribers, totalling 19.5 million, and a 25.5% YoY growth in network traffic,” said MTN.

“MTN SA continued to drive data access, affordability and usage with a 13.9% reduction in the effective data rate.”

It also reported seeing further upside in usage trends, with an active prepaid data subscriber consuming an average of 3.0GB of data a month (up 20.3% YoY).

Active postpaid data subscribers used an average of 15.2GB per month (up 24.3% YoY).

Technician working on an MTN tower

Consumer postpaid service revenue increased by 3.6%. MTN said this was supported by growth in subscribers, the sustained uplift in data consumption and price-up initiatives implemented in the first half of the year.

Subscribers increased by 2.6% compared to the same period last year. MTN’s postpaid customers increased by 12.9% to just under 9 million, while prepaid subscribers declined by 0.38% to 27.8 million.

“A bouquet of online propositions, designed to give flexibility to our customers, were launched in Q3 to stimulate growth in voice traffic and users,” the company said.

“MTN SA delivered steady growth in the residential business, with the successful introduction of new home propositions, including MTN Fibre, coupled with investment into the sales channel. This has yielded higher growth in customer numbers and revenue.”

Consumer prepaid service revenue declined by 3.1% YoY, and MTN said this demonstrated a continued sequential improvement on a quarterly basis.

“The decline in Q3 abated to 2.0%, compared to the 2.3% and 5.0% declines in Q2 and Q1, respectively,” it noted.

“This positive momentum was supported by better network availability and a streamlined focus on bundled offerings as well as simplification of products and services.”

MTN said its customer value management (CVM) initiatives continued to gain traction in South Africa, with personalised bundle offerings now available on eight platforms.

“CVM bundle penetration rose to 26%, up from 25% in Q2 and 23% in Q1,” it said.

Although there are signs of inflation easing, MTN said the South African trading environment remains very challenging and will continue to pose headwinds to MTN SA’s topline and Ebitda margin development.

“To mitigate these effects, the business will continue to enhance its customer experience, expand CVM offers, scale the fintech business and drive further expense efficiencies,” MTN stated.

“As part of this, we anticipate that MTN SA’s newly introduced postpaid propositions will help to drive market share gains, complemented by the focus on accelerating daily recharge activity and driving further Xtratime penetration.”

Xtratime is MTN’s name for its short-term airtime loan product.

“To support these initiatives, MTN SA will consolidate the momentum of the network resilience programme,” it said.

“The business has made the outstanding payment of R1.9 billion for low-band spectrum acquired in the 2022 auction, which will enable the efficient deployment of capex going forward.”

Mupita said they are pleased with the steady progress MTN SA is making in improving its service revenue and Ebitda margin trajectory.

“We expect this to underpin MTN SA’s attractive cash flow generation profile over the medium term, guided by our disciplined capital allocation framework.”

Now read: MTN’s bombshell mobile plan now available without changing your number

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MTN pumps R6.6 billion into South African network