MTN has revealed its interim financial results for the six months ended 30 June 2014. With the initial results revealed, MTN has unveiled key aspects of how it will build momentum throughout the African continent.
According to MTN, the company has made substantial progress on many of its strategic themes. The Group continues to improve operational and cost effectiveness with initiatives including the monetisation of passive infrastructure through tower deals across a number of key markets in Africa as well as Project Next! The back-office transformation programme, which commenced a pilot in Ghana during the period. The shared services hub located in Johannesburg will be fully operational within 18 months and the outsourcing of non-core network management services will be rolled out wherever clear and demonstrable efficiencies exist.
MTN is additionally looking to explore opportunities to expand its product offering outside of traditional voice and expect to increase its presence in the digital space by leveraging technology and maximising the opportunity of low internet penetration in many parts of Africa. The successful completion of the transactions with Africa Internet Holding (AIH) and Middle East Internet Holding (MEIH) positions the Group well to broaden its e-commerce platform and lifestyle offerings.
In addition to this, the company stated that: “We are well placed to continue the expansion of our MTN Mobile Money and broader financial services offerings and grow our innovative ICT solutions to corporate and SME customers. We remain committed to providing a distinct customer experience through value-driven and competitive initiatives and ongoing investment to improve network quality and capacity. We will continue to explore value-accretive M&A opportunities in line with our strategy.”
South Africa will also be focused on as MTN expects to build on the momentum that it has gained in the second quarter to regain market share by providing new and affordable products to both its post-paid and pre-paid subscribers.
MTN’s Nigerian operation will focus on meeting the significant market demand for financial services and mobile content with an expected positive impact on data revenue. According to the company, Infrastructure sharing will be a priority for MTN South Africa and MTN Nigeria in increasing their operational effectiveness.
An overview of the MTN Interim Results can be found below.
Group subscribers increased by 3,5% to 215,0 million. During the period MTN focused on reducing churn, offering competitive segmented offerings as well as improving network quality and capacity as key differentiators in our value proposition. Continued macro-economic weakness in some of our key markets, however, led to a decline in overall market net additions against the comparable prior period.
Reported revenue for the six months increased by 10,7%, supported by the continued weakness of the South African rand against our operating currencies, in particular the relatively stronger Nigerian naira, Central African franc and Ugandan shilling. On a constant-currency basis, revenue increased by 4,1%. This was largely the result of 8,0% revenue growth in MTN Nigeria, tempered by a 7,0% (3,4%) revenue decline in MTN South Africa. The Large opco cluster delivered pleasing results in line with guidance, growing revenue by 13,4%, with encouraging growth reported by operations in Ghana, Cameroon and Sudan. The Small opco cluster delivered a modest 5,7% increase in revenue as conditions in Guinea Conakry, Liberia and Yemen remained challenging.
Although MTN Nigeria delivered a solid performance, the operation faced regulatory pressures and localised network performance challenges. Notwithstanding this, the operation remains on track to deliver solid results for the full year. MTN South Africa took aggressive steps to regain its competitive market position. While financial performance will continue to be subdued in the short term, the South African operation expects to resume positive subscriber and revenue growth over the next 6 months.
Group EBITDA increased by 19,6% (10,6%) to R33 663 million excluding the profit from the sale of towers. This reflects the success of the Group-wide cost-control initiatives, particularly in Nigeria where EBITDA increased by 11,3%.
Capital expenditure for the period of R9 199 million reflected a decrease of 28,1% (32,7%) from the same period in 2013. More than two thirds of the full year’s capex budget has been committed. The Group’s operations rolled out 1 716 2G and 2 232 3G sites, providing greater capacity, quality and faster data speeds on our 3G and LTE networks.
