MTN South Africa remains under pressure, reporting a decline in revenue in the first four months of 2014 compared to the same period a year ago, the JSE-listed telecommunications group said on Tuesday.
The contraction in revenue was the result of the reduction in retail rates and the 1 April 2014 reduction in mobile inter-network call rates, also known termination rates, the group said.
“This trend is expected to continue for at least the next two quarters, reflecting the adjustments made to retail tariffs,” MTN president and CEO Sifiso Dabengwa told shareholders at the group’s annual general meeting.
Data revenue remains the largest contributor to revenue growth, with 14,5m data users on the network. MTN South Africa’s margin — measured using earnings before interest, tax, depreciation and amortisation (Ebitda) — declined marginally, largely due to lower outgoing voice revenue, a reduction in interconnection revenue and higher rent and utilities costs.
Vodacom CEO Shameel Joosub said last week that MTN was losing customers to both Vodacom and smaller rival Cell C. MTN last month announced it was cutting its headline prepaid call tariff to 79c/minute on per-second billing, apparently in an effort to stem the market share losses.
MTN Nigeria helped offset the poor performance in South Africa by recording healthy revenue growth in local currency, thanks to an increase in outgoing voice and data revenue.
“The Nigerian operation continues to maintain good network quality and capacity, enabling it to enhance its competitiveness and offer attractive value propositions,” said Dabengwa. “MTN Nigeria expanded its Ebitda margin when compared to the same period last year. This was largely due to the implementation of cost optimisation initiatives late last year.”
MTN’s large operating company cluster, which includes MTN Irancell, continued to perform well, delivering “solid revenue growth when compared to the same period last year”, he said.
“This was attributable to attractive promotions and improved usage on the network. Lower Ebitda margins in Cameroon and Ivory Coast were mainly a result of higher lease costs as a consequence of the sale of towers.”
MTN said data and mobile money services are key areas of focus as traditional voice revenues remain under pressure. For the four-month period, data revenue increased by 43% year-on-year and now contributes 17% to total revenue. This is compared to 14% a year ago.
“Improving customer experience in all of our operations is central to our strategy. Cost optimisation and the execution of our infrastructure-sharing strategy continue to make good progress,” Dabengwa said at the meeting. “MTN believes that it is well placed to take advantage of value-accretive opportunities while mitigating the various risks we face.”
The group increased its subscriber base by 2% for the four months to 30 April, driven in large part by growth in Nigeria, which added 1,1m subscribers during the month of April.
The group achieved double-digit revenue growth, in rand terms, for the four-month period compared with the corresponding period for 2013, helped by a weaker rand and a strong overall performance from its large operating cluster. — © 2014 NewsCentral Media
