MTN Grows Revenue, Adds More Subscribers

TN, Africa’s biggest mobile  operator, has reported service revenue growth, driven by increased voice revenue and the continued expansion of  and  revenue.

The company this morning announced its financial results for the six months ended 30 June. The JSE-listed MTN serves 223.4 million subscribers in 22 countries across Africa and the Middle East.

Among the biggest highlights, MTN’s service revenue was up 10.2%; data revenue rose 26.7%; it had 223.4 million subscribers; active data users stood at 71.2 million; and active MTN Mobile Money customers rose to 24.1 million.

According to the operator, its earnings before interest, taxes, depreciation and amortisation (EBITDA) was up 17%; EBITDA margin was up by 2.2 percentage points to 35,5%; capex up 20%; basic headline earnings per share (HEPS) is 215c from 231c; while adjusted free cash flow was up 14.4%.

An interim dividend of 175c per share was declared.

Last month, MTN’s competitor Vodacom also released a trading update for the quarter ended 30 June, stating it added 2.5 million customers, while group service revenue grew 5.2%.

MTN had an encouraging first half of 2018, with acceleration in the second quarter, supported by an improved operational performance across many markets. This was led by Nigeria, Ghana and South Africa, says MTN Group president and CEO Rob Shuter.

“Service revenue growth increased, driven by robust voice revenue growth and the continued expansion of data and digital revenue. This, in turn, was supported by a 2.8% increase in subscriber numbers, continued network rollout, increasing 3G and 4G population coverage and improving customer service.

“We resolved some key regulatory issues in Cameroon and Benin, launched the initial public offering (IPO) of MTN Ghana and made progress on the IPO of MTN Nigeria. As part of our ongoing portfolio review, we agreed to the sale of MTN Cyprus.”

In the period, he adds, MTN further strengthened its governance of risk, continued to boost its specialist skills base, recorded improvements in employee engagement and extended mobile Internet access to more people.

“Despite continued challenges in repatriating funds from MTN Irancell, the board remains committed to plans to declare a total dividend of 500c per share for 2018 and is targeting growth of 10% to 20% over the medium-term.

“We believe everyone deserves the benefits of a modern connected life and see opportunity to provide this. We are confident that MTN remains well-placed to deliver on our medium-term guidance,” says Shuter.

SA business

The JSE-listed company adds that MTN SA reported improved profitability on a strong consumer business, supported by its customer value maximisation initiatives.

However, it points out that growth in service revenue was below expectations on the slow turnaround of the enterprise business.

“Despite this, we started to see a stabilisation of enterprise towards the end of the second quarter after the appointment of new leadership. Data usage was driven by the strong uptake of social media bundles. Digital revenue grew on demand for Xtratime and gaming.”

It adds that in SA, prepaid service revenue increased by 2.5%, while postpaid service revenue declined by 2.5%. Postpaid churn stabilised.

“We expect an acceleration of service revenue growth in the second half, driven by improvements in the postpaid and enterprise segments.”

The subscriber base increased by 2.2% from December 2017, to 30.2 million. “We continued to record network improvements. Boosted by these, we signed a deal to provide wholesale roaming services to Cell C, which will lead to incremental growth in revenue and EBITDA from the fourth quarter. Following the introduction of new methodology to measure net promoter scale (NPS), we moved to number two NPS.”

MTN says ahead of the decision of the courts on the timeline for the implementation of new data regulations, over the next six months it will proactively implement the various changes to which it has committed.

African operations

MTN Nigeria performed ahead of expectations, with double-digit growth in voice revenue driving accelerated service revenue growth and the further widening of the EBITDA margin, the company says.

It notes that increased usage and growth in data subscribers supported data revenue growth. However, digital revenue declined as a result of further optimisation of MTN’s value-added services business.

The subscriber base in Nigeria expanded by 5.6% from December 2017 to 55.2 million. “We made good progress on our plans to list MTN Nigeria on the Nigerian Stock Exchange. We do not expect any material cash inflows to the group from the IPO.”

MTN Ghana’s strong first half performance was supported by various attractive value propositions, including the youth activation initiative MTN Pulse, the operator says.

In Ghana, subscribers grew by 5.5% from December 2017 to 16.5 million. The number of active data subscribers increased by 6.1% in the same period to 6.9 million and data volumes more than doubled. This supported a 367% increase in data revenue.

MTN Uganda increased service revenue by 8.8%, led by a 19.7% increase in digital revenue. Meanwhile, the company reports that MTN Cameroon’s subscriber base declined by 5.9% from December 2017 to 6.6 million in a difficult operating environment, impacted by a data shutdown and weak economic activity. Service revenue decreased by 7%, affected by the lower subscriber base and despite 15% growth in data and 71.2% growth in digital revenue.

MTN Ivory Coast’s service revenue also declined by 6.6% on weaker voice revenue in a competitive market. Nonetheless, digital and data revenue continued to expand, up by 34.7% and 15.4% respectively.

Iran unit

In Middle East and North Africa, MTN Irancell had a good first half and remained the market leader in terms of data services, the company says.

It notes that strong growth in data revenue was the result of the extensive network rollout and optimisation during 2017, as well as the additional rollout of 3G and 4G network sites in the first half and successful spectrum re-farming, attractive segmented offers and strong subscriber net additions as more subscribers moved to 3G-enabled devices.

By end-June, of the total of 44.6 million subscribers, 19.3 million were active data subscribers, it notes, adding that data traffic volumes increased by more than 110% year-on-year.

MTN Irancell secured access to more spectrum in the 2 600MHz band. Despite an increase in transmission costs, optimisation in other areas of the business led to total costs being managed and this contributed to EBITDA of R6 745 million, says MTN.

EBITDA was also supported by a net gain on the dilution of the investment in Iran Internet Group. This was following the entry of a new investor into that business, MTN concludes. itweb

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