MTN has increased its South African subscriber base by 1.5% to 31.2m, with revenue rising by 1.6%, the telecommunications group said on Thursday.
“MTN South Africa delivered an encouraging performance, supported by a strong prepaid performance, network expansion and a strengthened leadership team,” the group said in notes accompanying its interim financial results for the six months to 30 June 2017.
The prepaid segment’s subscriber base increased by 1.7% to 26m, while the post-paid segment “showed early signs of a recovery”, increasing its subscriber base by 0.2% to 5.2m.
Total revenue in South Africa increased to R20.2bn, with service revenue rising by 5.2% on an organic basis to R16.8bn. This was underpinned by growth in data revenue and digital revenue, up 18.5% (organic) and 37.6% respectively.
Prepaid service revenue increased by 9.2%, while post-paid service revenue fell by 3.9%.
Capex in South Africa fell by 27.2% to R3.5bn in the first half, though group CEO Rob Shuter said on a call with journalists on Thursday morning that this number will accelerate in the second half to bring the full-year figure to about R11.5bn.
It said it expects mid-single-digit service revenue growth in South Africa in the second half, with Ebitda margin expansion of between 50 and 100 basis points year on year.
“This will be supported by a strong focus on customer service and significantly improved network quality, capacity and speed. Targeted cost-optimisation initiatives will support Ebitda growth,” it said. Ebitda is earnings before interest, tax, depreciation and amortisation and is a measure of operational performance.
Group-wide, MTN’s numbers were hit hard by substantially weaker currencies in many of the markets in which it operates, including its biggest, Nigeria, as well as the stronger rand.
Revenue falls
Group revenue fell by 18.5% to R64.3bn, though the decline was just 6.7% when adjusted for currency movements. Group service revenue fell by 19.1% (-7.5% when adjusted for currencies), while data revenue rose by 9.6% (31.9%). Ebitda fell 27.7% (+3.1%) to R21.2bn. The group declared an interim dividend of R2.50/share.
It said it is “on track” to meet the 2017 financial year guidance, communicated in March. However, macroeconomic conditions “remain challenging across a number of our markets, with Nigeria continuing to experience a weaker naira as well as hard currency liquidity challenges”.
“Although South Africa entered a technical recession in the first quarter, the rand strengthened considerably against the US dollar during the period, while many of the currencies in our other markets weakened. Despite these macro challenges, the group continues to deliver on its operational targets.”
It said that during the first half, management — led by Shuter — “undertook a thorough review of the group strategy and developed a clear growth plan for MTN that will be arranged under six strategic pillars comprising: Best customer experience; Returns and efficiency focus; Ignite commercial performance; Growth through data and digital; Hearts and minds; and Technology excellence. We refer to this as the ‘Bright’ strategy.
“Bright builds on work done over the past 18 months, in particular Project Ignite, our operational execution programme embarked on last year, in our two largest markets, MTN South Africa and MTN Nigeria.”
Subscriber numbers in the first half decreased by 3.6% to 231,8m, impacted by a decline in subscriber numbers in MTN Nigeria and MTN Ghana. “This was largely a result of the group’s initiative to modernise subscriber definitions to reflect the business’s changing mix of revenue streams. The implementation of the modernised definitions continues and is expected to be completed by the end of the year.” — (c) 2017 NewsCentral Media
