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    TechCentralTechCentral
    Home » News » MTN South Africa is firing on all cylinders

    MTN South Africa is firing on all cylinders

    By Duncan McLeod12 August 2021
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    MTN South Africa CEO Godfrey Motsa

    MTN South Africa has turned in a resilient financial performance in the first six months of the financial year to June, with both margin expansion and strong sales growth during the period.

    Service revenue at the unit, which is led by CEO Godfrey Motsa, climbed by 9.3%, with data revenue up 12.3%, while earnings before interest, tax, depreciation and amortisation (Ebitda) rose 16.4% to R9.8-billion, underpinning a robust 1.5 percentage point expansion in the Ebitda margin to 41.4%. Ebitda is a measure of operational profitability.

    The strong operational performance filtered through to profit after tax, which leapt by 256.9% to R2.3-billion, boosted by a decline in finance costs. Adjusted free cash flow also grew strongly, to R6.6-billion (up 34.6%), on the back of the Ebitda growth and a decline in capital expenditure (R3.2-billion during the six-month period).

    Ebitda rose 16.4% to R9.8-billion, underpinning a robust 1.5 percentage point expansion in the Ebitda margin to 41.4%

    The South African business “delivered a strong overall performance, enabled through solid commercial and operational execution across all business units”, MTN Group said in its interim results published on Thursday.

    “This drove healthy and sustained growth in all our core businesses in South Africa: the prepaid consumer business unit, the post-paid consumer business unit, the enterprise business unit and the wholesale business.”

    All areas performing

    MTN said the 9.3% growth in South African service revenue exceeded its medium-term target and reflected the “solid revenue performances in prepaid (up 4%), post-paid (up 7.3%), enterprise (up 14.1%) and wholesale (up 62.4%)”.

    Subscriber numbers increased by two-thirds of a million to 32.7 million, driven by an increase of around half a million in post-paid subscribers to 7.3 million, which “recovered well amid less-stringent lockdown restrictions, more data value offers and advanced CVM (customer value management) churn management”.

    Data was a key driver of the strong growth in revenue, MTN said. Data revenue increased by 12.3%, supported by a 56.5% year-on-year increase in traffic. MTN South Africa now has 15.8 million data subscribers, while data prices fell by an effective 30% during the period. The active prepaid data subscriber now consumes more than 2GB/month of data, on average. Active post-paid data subscribers use more than 10GB/month of data, on average.

    “The consumer post-paid business remained resilient in a highly competitive trading environment, generating healthy service revenue growth of 7.3% for the half. This was supported by subscriber growth driven by channel expansion, specifically the online channel, well-managed churn, as well as the consistent drive of Sim-only and data-orientated packages.”

    The enterprise business “remained on a positive trajectory, now recording growth for more than seven consecutive quarters”. Enterprise service revenue was up 17.5% for the half, on the back of strong voice and data revenue.

    Wholesale revenue increased by an eye-popping 62.4%, supported by a “notable improvement in payments from Cell C, for which we continued to recognise revenue on a cash basis”.

    MTN South Africa recognised R1.4-billion in roaming revenue, up from R788-million

    In the six-month period, MTN South Africa recognised R1.4-billion in roaming revenue, up from R788-million in June 2020. As of 30 June 2021, about R300-million of Cell C roaming revenue remained unrecognised.

    “MTN South Africa has progressed well on the phase-two transition of the roaming agreement, with approximately 35% of Cell C traffic on our network. The agreement envisages a three-year transition towards a full national roaming arrangement under which MTN will carry all of Cell C’s network traffic.” — © 2021 NewsCentral Media



    Cell C Godfrey Motsa MTN MTN South Africa top
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