MTN Group said on Wednesday that it will appoint a new CEO by the end of June “at the latest”. In a note to shareholders ahead of the group’s AGM, MTN said the search for a new CEO was “well under way”.
Former MTN CEO Phuthuma Nhleko has been acting as CEO — with the title of interim executive chairman — since the departure last November of Sifiso Dabengwa.
Dabengwa fell on his sword following the imposition by Nigeria of a record-breaking US$5,2bn fine (since reduced to $3,9bn). The Nigerian Communications Commission imposed the fine after MTN’s subsidiary in the West African nation failed to cut off more than 5m unregistered Sim cards.
On Wednesday, MTN said it continues to engage with the Nigerian authorities over the fine.
“We remain optimistic [about] reaching a conclusion [to] this matter in the short term,” MTN said. “We will continuously monitor developments with regard to the Nigerian fine and will review the adequacy of the provision at the end of the reporting period.”
In the first four months of 2016, MTN Nigeria’s organic revenue declined by 6% year on year, due mainly to “uncompetitive pricing arising from the suspension of regulatory services and regulatory restrictions that obliged operators to seek permission from customers to charge out-of-bundle rates upon the depletion of data bundles”.
“Revenue was also impacted by subscriber disconnections and an increase in promotional minutes to encourage subscribers to complete their Sim registration details,” MTN said.
“Despite the decline in MTN Nigeria’s organic data revenue, data traffic increased by 27% year on year, supported by the continued improvements made to the data network. This was further enhanced by the lifting of regulatory services at the end of March 2016 and the approval of price plans in early May.”
The group said Nigeria’s May daily data volumes were up by about 20% month on month, with nearly 4m subscribers taking up the new offers, following the introduction of the new price plans.
“The early signs are positive on both voice traffic as well as new subscriber acquisition volumes, where month-on-month gross connections are showing positives signs with an increase of almost 13%,” it said.
MTN South Africa, meanwhile, increased revenue by 4% year on year to end-April 2016, supported by a 17% improvement in handset revenue and a 23% growth in data revenue.
The group said its South African subsidiary “continued to show positive momentum” after several years of relatively poor performance.
The local unit’s data growth was supported by a robust 59% year-on-year increase in data traffic. It also reported a 55% increase in revenue from digital services.
However, revenue was affected by the 48-hour network outage in February 2016 as well as a decrease in consumer spend over the period, the group said.
At the end of April, MTN had 230,3m subscribers, an increase of 1% over a year ago. This was impacted by a 7% decline in subscribers in Nigeria and an 11% decline in Uganda, with both markets affected by Sim card registration requirements.
MTN South Africa reported a 7% increase in subscribers supported by improvements in the prepaid distribution channel.
Reported group revenue increased by 15% over a year ago, supported by a 21% decline in the average rand exchange rate against the naira and a 23% decline in the average rand exchange rate against the US dollar.
Data revenue in South Africa is also expected to benefit from aggressive handset sales
MTN said it expects its performance to be impacted by the weak macroeconomic environment in key markets as well as by tough competition. “We, nevertheless, remain confident about the longer-term prospects of the countries in which we operate.”
It said that despite the challenges in Nigeria, it expects its subsidiary there to improve its performance given the focus on reconnecting subscribers and the reinstatement of regulatory services enabling the operation to provide more competitive tariffs and promotions.
“Early indications of tariff changes are positive for both data and voice revenue. Improvements made on the data network as well as once-off costs in early 2016 associated with the registration process will also contribute to improved performance in the second half of 2016.”
In South Africa, it said it expects a continued improvement in revenue growth, supported by an aggressive 3G and 4G/LTE network roll-out, improvements in network quality and competitive offerings. “Data revenue in South Africa is also expected to benefit from aggressive handset sales,” it said.
It said discussions to repatriate roughly $1bn from its operation in Iran, where it holds a 49% share, are taking longer than expected. — © 2016 NewsCentral Media
