Although its South African operation showed signs of difficulties, its diversified presence in emerging markets ensured that it group revenue growth was maintained.<\/p>\n
MTN released results for the year-ended 31 December 2009 today, reporting a 28% growth in group subscriber numbers and a 9,2% increase in revenues to R111,9 billion. The group’s adjusted headline earnings per share were 16,6% lower at 754.3 cents, but this was due to significant movements in exchange rates. Without the substantial impact of functional currency losses, adjusted headline earnings per share increased by 8,5% to 878.9 cents.<\/p>\n
Subscriber numbers in South Africa decreased by 6,4%, while the region showed an EBITDA margin decline of 1,7% to 31,4%.<\/p>\n
“For the first time we have seen MTN really struggling with its operations in South Africa,” says Frost & Sullivan ICT industry analyst Spiwe Chireka. “Regulatory risks have been a key factor impacting the company’s performance. Interconnection fee cuts and subscriber registration have dampened both revenue and subscriber growth.”<\/p>\n
However, Chireka does expect a recovery from the operator in the next 12 months. Frost & Sullivan’s global analysis indicates that mobile operators’ short term revenues tend to suffer following interconnection cuts, but they can make a full recovery through strategies such as increased subscription charges, lower subsidies and reduced incentives for distribution.<\/p>\n
In addition, the FIFA World Cup is likely to boost revenues for MTN through airtime sales, roaming fees and match content delivery.<\/p>\n
Performance in Nigeria was encouraging, with 30% subscriber growth for the period. Revenue in local currency increased by 33%, but due to the strength of the South African currency, this translated into growth of just 5,6% in rand terms.<\/p>\n
EBITDA for the West and Central African region as a whole increased by 6,7%, while EBITDA in the Middle East and North Africa region showed the biggest improvement, growing by 24,2%.<\/p>\n
“In its favour, MTN has also formed relationships with some of the leading businesses in South Africa to become the telecoms partner of choice in their African expansions,” Chireka adds. “This has been possible due to the group’s geographical presence advantage. It also has the money to lap up any non-cellular operators where it needs to, to ensure that it can deliver additional services.”<\/p>\n
Chireka notes that data services, in particular business data services, also made a noteworthy contribution to overall performance. MTN decided to directly take on Telkom Business, Neotel and Vodacom in the business services space.<\/p>\n
“Although a latecomer in this arena, the group has the deep pockets to make the necessary investments to ensure that it keeps up with the competition,” she says. “Frost & Sullivan believes this will be the next big growth area on the continent.”<\/p>\n
Together with the current challenges that are affecting the mobile market in Africa, the opportunities in business data services may lead to a change in approach from MTN. Chireka believes that the group may well focus its short term efforts on services that are non-mobile focussed.<\/p>\n
“Mobile voice is nearing critical mass, and while it makes sense to try and raise the average revenue per user (ARPU), the results of such activities can take time,” she says. “So rather than focussing only on mobile and trying to increase spending in that area, it may be time for MTN to move away from its comfort zone and move into the world of ICT as a whole.”<\/p>\n
Chireka points out that MTN has the geographical spread to successfully service multinational corporations within and coming to Africa. The group would however need to build brand equity separate from its mobile communications operations.<\/p>\n
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