MTN Group expects to add more than 20m subscribers in the next 12 months, taking its customer base from 164,5m to 184,8m by the end of the year. In 2011, the JSE-listed mobile group, which has operations in 21 countries across Africa and the Middle East, grew its subscriber base by 16,2% to 164,5m.

It expects to add a further 2,9m subscribers in SA (from 22m at the end of December 2011); 4m in Nigeria (its most profitable market where it had 41,6m customers at the end of last year); and 4m in Iran (from 34,7m).

MTN has turned in a strong financial performance for the 2011 financial year, raising its dividend payout ratio to 70% and accelerating the purchase of its own shares to R927m. Share buybacks will continue in 2012 “as and when appropriate”, says group president and CEO Sifiso Dabengwa. News of the improved dividend helped send the share price up more than 2% in afternoon trading on the JSE on Wednesday.

The telecommunications group hiked revenues by 9,7% in 2011 when stripping out the impact of currency fluctuations, while the margin on earnings before tax, depreciation and amortisation expanded by 3,4 percentage points to 44,9%. Excluding the profit from the sale of the passive components of its base stations in Nigeria to a third-party tower operator, the margin was one percentage point lower.

With the effects of currency movements factored in, group revenue increased by 6,3% to R121,9bn due to good growth in Nigeria, SA and Iran of 4,1%, 7,7% and 20,1% respectively. Local currency revenue growth in Nigeria and Iran was 9,6% and 26,5%.

Data revenue (excluding text messages) remained strong across the group, albeit off a low base, increasing by 30,5%.

Group operating costs remained relatively flat and well below the revenue growth rate. Total operating costs were R68,6bn, a 2,1% increase over 2010. Capital expenditure fell by 9% to R17,7bn due to delays in projects and and open orders in the first half of the year. Second-half capex spend picked up following “corrective action”. Had there been no change in currency rates during the year, capex would have been R18bn, compared to an approved budget of R22,2bn. The group has approved R24,4bn for capex in 2012, of which R4,6bn will be spent in SA (against actual 2011 spending of R4,1bn), R10,5bn in Nigeria (R6,3bn) and R1,3bn in Iran (R1,2bn).

SA operation
MTN’s SA subsidiary grew its subscriber base by 16,9% over 2010, reaching 22m customers. This was mainly as a result of growth of 17,6% in the prepaid segment to 18,2m subscribers. The postpaid segment showed growth mainly in the second half of the year, increasing subscribers for the year by 14% to 3,8m.

Market share declined marginally in the first half of the year, but recovered in the second half.

Revenue in SA increased by 7,7% due to strong growth in data revenue, which was up by 27,7% (excluding text messages) and growth in total airtime and subscriptions of 4,2%. Prepaid airtime and subscription revenue increased by 14%. Strong growth in handset revenue of 45,3% was as a result of “robust demand” for both entry-level handsets and demand for smartphones.

Data revenue (excluding SMS) now contributes 12% of SA revenue. At the end of the year, there were 5,5m 3G devices on the network, including 3,6m smartphones and 1,4 million dongles and other data devices.

Average revenue per user per month declined by 12%, mainly due to lower interconnect revenue from other operators.

SA recorded a 1,1 percentage point increase in operating profit margins due to cost savings in general expenses, professional and consulting fees, and lower marketing and advertising costs.

MTN SA added 313 2G and 598 3G base stations added during the year, bring the total to just under 10 000. It also has 103 long-term evolution towers as part of a pilot project.

“Fibre roll-out remains a priority with the national, long-distance fibre project still underway,” the group says. “At the end of December, 89% of the Johannesburg to Durban route was trenched, as was 86% of the Johannesburg to Bloemfontein route and 58% of the Bloemfontein to Cape Town route.

Nigeria
Nigeria remains by far MTN’s biggest and most profitable market, though average revenue per user has fallen below US$10/month for the first time.

The group says the Nigerian business, which has a 50% market share, faced a “challenging year as the entire market was negatively affected by the process of Sim card registration”.

“Aggressive price competition had a negative impact on gross connections and network quality again became a focus area for the regulator as higher elasticity from lower pricing impacted traffic demand across almost all of the major networks.”

Revenue in local currency increased by 9,6% mainly driven by a 54,5% increase in interconnect revenue. “This was a result of continued changes in traffic patterns during the year as cheaper off-network prices were offered tactically by the competition. More competitive tariffs by MTN in the second half of the year have partially stabilised the traffic mix.”

Data revenue (excluding SMS) soared by 105%. MTN Nigeria has 1,7m smartphones and 330 000 dongles on its network.

Airtime and subscription revenue increased by only 3,7% due to a reduction in effective tariffs which was not fully compensated by a proportionate increase in minutes of use, the group says.

More than 500 2G and 453 3G towers were added in 2011, bringing the total to 9 131. About 1 300km of fibre was also rolled out and connected to 90 towers.

Iran
MTN Irancell, in which the group has a 49% stake, grew its subscriber base by 16,6% in a market where penetration is above 100%. The growth was mainly attributable to lower denomination vouchers and seasonal promotions, increasing market share to 45%.

Airtime and subscription revenue increased by 22,8%, while interconnect revenue increased 11,4%. Data revenue (excluding SMS) was up by 66,5% off a low base. Average revenue per user increased by 2% to $7,90. — Duncan McLeod, TechCentral