MTN South Africa showed “clear evidence” of a “successful turnaround” in the second half of 2014, the mobile operator said on Wednesday, despite the operation reporting a 3,9% decline in revenue and a sharp decline in operating margins.
For the year ended 31 December 2014, MTN South Africa’s margin — measured using earnings before interest, tax, depreciation and amortisation (Ebitda) — fell by 2,6 percentage points to 32,1%. Even MTN’s data revenue, the area of strongest growth in South Africa’s mobile industry, showed a meagre 7% improvement for the full year.
“MTN South Africa’s performance was in line with our expectations and provided clear evidence in the second half of a successful turnaround with consistent month-on-month improvements in the last six months of the year,” MTN Group told shareholders.
In the fourth quarter, MTN South Africa’s Ebitda margin increased by 28,1% over the previous three months, despite what MTN called a “challenging consumer environment”.
The operation increased its subscriber base by 8,9% to 28m, reporting 2,7m net additions in the second half versus the 430 496 net disconnections recorded in the first half of the year.
“This was largely a result of segmented offerings based on usage, limited duration on-net promotions such as Wow and below-the-line advertising campaigns in the prepaid segment. As a result, the prepaid subscriber base increased by 9,1% to 22,6m,” MTN said.
“The post-paid segment delivered a significantly improved performance, reporting net subscriber additions of 414 251 for the year. This was supported by a variety of revised offers.”
MTN South Africa’s revenue declined by 3,9% to R38,9bn. This was mainly a result of a 36% decline in interconnection revenue due to lower mobile termination rates — the regulated fees operators charge each other to carry calls between their networks.
Although data revenue increased by only 7%, there was “a meaningful improvement in the fourth quarter with mobile data revenue growth of 17% when compared to the same period last year”.
“Fourth quarter 2014 on third quarter 2014 mobile data revenue growth was 42,3%. Increased 3G coverage, improved smartphone adoption and tailored data bundles were the main contributors to this growth,” it said.
“By year-end, data revenue contributed 23,8% of total revenue, from 21,4% in 2013.”
The number of smartphones on MTN’s network increased by 17,8% to 5,9m, and the number of data users increased by 20,1% to 17,1m.
Capital expenditure was R5,7bn, “slightly lower than budget” as a result of improvements to procurement processes. MTN South Africa added 520 new 2G sites and 904 3G sites in 2014. It intends increasing capex “significantly” in 2015. — © 2015 NewsCentral Media
