MTN South Africa has reported a surge in average data consumption by its subscribers, with the average mobile contract user now consuming 12.9GB/month and the average prepaid user 3.3GB/month.

However, the company has said it plans to adjust data prices in the current quarter, a move that could have an impact on the rapid growth in demand.

“MTN South Africa is revising its above-the-line and CVM (customer value management) data bundle portfolios (including fixed-wireless access) in the second quarter to improve effective pricing,” it said, without elaborating on the scale of the planned adjustments.

The planned price increases come amid a “challenging operating environment”, where economic growth remains muted.

Asked for more comment on the pricing adjustments, an MTN spokeswoman told TechCentral that the company will revise its “bundle portfolio pricing due to inflationary pressure which is being felt across the sector”.

“Our CVM Made4U portfolio continues to offer personalised pricing with continuous learning and optimisation across customer segments. Our FWA Home Internet portfolio has gained great momentum and to ensure the best quality network for all of our customers, we have made fair-usage policy adjustments effective 1 May 2024.”

Both prepaid and contract users grew their data consumption in the first quarter of MTN’s 2024 financial year (January to March 2024) by more than 22% year on year as demand for internet services rose.

Load shedding

If fixed-wireless access services – typically home broadband subscribers who use the wireless network for at-home access – are included, the average post-paid user consumed even more: 21.9GB/month of data, up 55% compared to the same period a year ago, MTN said in a trading update on Tuesday.

“There was also an improvement in the frequency and severity of power outages, with a total of 83 days of load shedding experienced during the quarter, compared to 90 days in the first quarter of 2023. MTN South Africa’s investment in resilience has yielded excellent results, notably the significant improvement in network availability,” it said.

“In this context, MTN South Africa achieved solid service revenue growth of 3%, with all key business segments showing positive momentum from 2023. In a tough and competitive trading environment, MTN South Africa grew the total number of subscribers by 3.3% year on year to 37.1 million.”

Read: Currency woes knock MTN first quarter results

Voice minutes continued to decline in the first quarter, though at a slower pace than in previous years at -5%. That compares with -16% in the same quarter last year and -9.8% in the fourth quarter of 2023.

Data, however, continued to be a “key growth driver for the business and showed strong underlying momentum as active data users grew by 6.1% year on year to 20.4 million”.

Residential broadband remains a big focus for MTN South Africa, with its strategy focused on growing fixed-wireless access and fibre to the home.

Service revenue in consumer prepaid was 1.1% higher, reflecting the ongoing financial pressure on consumers and the impact of macroeconomic factors on disposable income.

MTN reported “solid” growth in its enterprise business, with double-digit service revenue growth on 10.1%, helped by growth in data consumption, bulk SMS and new contract sign-ups.

The wholesale business held steady, with service revenue up by 0.8% (including incoming voice), supported revenues from its national roaming customers, Cell C and Telkom.

The fintech business saw year-on-year revenue growth of 57.9% (including XtraTime, its airtime advance product) and strong growth in Mobile Money revenue, albeit off a low base.

Ebitda – a measure of operating profit – rose by 3.6% in the quarter, an expansion of 0.3 percentage points to 36.5%, including a once-off gain from disposals. Excluding these gains, Ebitda margin was 34.9%, down by 1.2 percentage points.

“MTN South Africa is front-loading investment into the device market to support its revenue acceleration initiatives. This cost investment had a negative impact on Ebitda margin in the first quarter, although this is anticipated to abate in the second half [of the financial year],” it said.

“Revenue acceleration initiatives are anticipated to continue in the second quarter, before abating in the second half. This will continue to weigh on Ebitda margin in the short term. Overall, these interventions – supported by improved network availability and expense efficiencies – are expected to underpin the recovery in top-line growth and Ebitda margin towards the medium-term guidance by the fourth quarter of 2024.”

Network resilience

The company said it has completed its network resilience investment, designed to keep its network running optimally during load shedding.

“This deployment incorporated the upgrade of rectifiers, additional battery capacity (to allow for a minimum of six hours of battery autonomy) and a mix of static and mobile generators,” it said.

“MTN South Africa is also piloting solar solutions on a limited number of sites. In addition, where there are higher risks of theft or vandalism, additional security solutions are deployed, and active infrastructure changes implemented.” — © 2024 NewsCentral Media