MTN South Africa delivered strong subscriber growth in the third quarter of 2020, propelled higher by an advance in prepaid users. This, coupled with surging demand for data, helped lift revenue and margins.

Total subscribers increased by 1.9 million in the quarter, to 30.9 million, with most additions in prepaid, where the total reached 24.3 million, marking the largest quarterly increase in about 18 months.

Post-paid subscriber numbers remained broadly flat at 6.6 million, primarily as a result of churn on short-term Covid-19-related deals. Excluding the net impact of these deals, the post-paid subscriber base increased 168 100 for the quarter.

Strong data traffic growth of 80.6%, coupled with a 500 000 increase in active data users to 14.7 million supported a 16% increase in mobile data revenue in the first nine months of the year. This is despite a reduction in the effective data tariff in the past year of 34.7%, demonstrating elasticity in demand as prices come down.

“Service revenue growth was supported by the strong performance in the consumer prepaid business, continued growth of the enterprise business and the resilience of the consumer post-paid business,” MTN Group said on Friday.

However, the results were negatively impacted by the termination of MTN South Africa’s roaming agreement with Telkom, which ended in June 2019, and the effect of accounting for Cell C’s roaming revenue on a cash basis. Excluding the impact of national roaming, the company would have recorded service revenue growth of 3.4% in the first nine months of the year and 5.7% year on year in the third quarter.

Wholesale impacted

Wholesale revenue declined by 14.4%, impacted by the end of the Telkom deal. MTN South Africa recognised approximately R1.3-billion in national roaming revenue in the nine months to 30 September 2020 (taking into consideration that no Cell C revenue was recognised in the third quarter of 2019), while R698-million of Cell C revenue remained unrecognised as at September 2020.

MTN South Africa’s Ebitda margin (a measure of operational profitability) expanded by 2.7 percentage points to 39.3%, aided by the reductions in device volumes and subsidies, execution of a cost-efficiency programme as well as channel optimisation.

Since launching Mobile Money (MoMo) in South Africa in January 2020, this service “continues to scale”, with two million registered users as of 30 September.

MTN Group, meanwhile, reported 273 million customers across its 21 markets at the end of September — 107.2 million of which were active data users. Group-wide MoMo customers climbed to 41.8 million.