MTN South Africa has improved profitability on the back of a strong retail consumer business, though its enterprise segment is not turning around as quickly as had been hoped, putting pressure on service revenue growth.
South African service revenue increased by 2.9% year in year to 30 June 2018, with data revenue up 13.5%, MTN Group said on Wednesday. Earnings before interest, tax, depreciation and amortisation (Ebitda) — a measure of underlying operational profitability — rose by 5.7% to R7.45-billion, lifting Ebitda margin by 0.8 percentage points to 35.2%.
Despite the slow turnaround in the enterprise business, MTN said there has been “stabilisation” towards in the end of the second quarter after new leadership was installed.
Data usage was driven by the strong uptake of social media bundles. Digital revenue grew on demand for Xtratime and gaming.
Prepaid service revenue increased by 2.5%, while post-paid service revenue declined by 2.5%. Post-paid churn stabilised. “We expect an acceleration of service revenue growth in the second half, driven by improvements in the post-paid and enterprise segments.”
The subscriber base increased by 2.2% from December 2017 to 30.2 million.
It said the recently signed roaming agreement with Cell will lead to “incremental growth in revenue and Ebitda from the fourth quarter” of 2018.
Group wide, MTN reported service revenue up 10.2% on the back of a 26.7% improvement in data revenue (in constant currencies and after accounting for the impact of pro-forma adjustments). Group Ebitda margin improved by 2.2 percentage points to 35.5%. Basic headline earnings per share fell, however, to R2.15, from R2.31 previously. MTN declared an interim dividend of R1.75/share.
“MTN had an encouraging first half of 2018, with an acceleration in the second quarter, supported by an improved operational performance across many markets. This was led by Nigeria, Ghana and South Africa,” said group 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 roll-out, increasing 3G and 4G population coverage and improving customer service.” — (c) 2018 NewsCentral Media
