MTN South Africa is under severe pressure, the telecommunications group’s full-year results for the year ended 31 December 2013 show. Revenue declined by 6,1%, with downward pressure on margins.
Although the group’s South African operation showed “signs of improved performance” in the second half, this wasn’t enough to stem a sharp decline in full-year outgoing voice revenue, which declined by 8,3% to R19,3bn.
“While the South African business delivered disappointing results, the executive team is focused on helping this business deliver an improved overall performance in the year ahead,” MTN told shareholders in notes accompanying its 2013 results.
MTN South Africa’s reported revenue decline was worse than it would have been due to a review in the accounting treatment of handset sales. Excluding this impact, revenue decreased by 1,6%.
Interconnect revenue from other operators fell by a quarter, while profit margin, calculated using earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 0,3 percentage points to 33,8%. The Ebitda margin declined by 1,8 percentage points, excluding the impact of the handset sales.
MTN South Africa’s prepaid subscriber base declined by 1,1%, bringing the total prepaid base to 20,7m subscribers. Most of the subscriber loss reported earlier in the financial year was recovered in the second half, it said.
The post-paid segment performed better, increasing its subscriber base by 11,3% to 5m. There was a shift by contract subscribers to higher tariff plans.
One bright spot was data, where revenues climbed by 20,2%. The number of smartphones on MTN’s network increased by 32,6% to 7,3m, and the number of data users increased by 6,4% to 14,3m.
“Although there is still much work to be done, MTN South Africa started to show some progress during the second half of the year after a challenging start to 2013,” the group said. “This improvement was largely a result of more relevant segmented offerings to the prepaid segment, particularly the revised MTN Zone offering. An international calling campaign offering cheaper calls to other African countries and the discontinuation of value-eroding offers were also key contributors.”
Although cost increases at MTN South Africa were kept below inflation in 2013, the group says cost optimisation and labour productivity remain priority areas. In December, MTN South Africa reduced the number of employees given its increased focus on aligning costs with revenue. The cost structures of the business will continue to be reviewed in 2014, it said. — (c) 2014 NewsCentral Media
