MTN reveals revenue growth despite drop in subscribers

On Thursday, 31 October 2019, MTN South Africa published its trading update showing mixed results for the last nine months, ending 31 September 2019. The mobile network provider indicated that although there has been a slight growth in service revenue (of 9.6%), there has also been a small drop in subscribers (of 0.3 million).

MTN delivers steady progress despite challenging conditions in key markets.

“Service revenue growth and improvements in our EBITDA margin continued into the third quarter,” says MTN Group CEO, Rob Shuter, on the update. “We remain committed to driving access to the internet and financial services and in Q3 we added 4.7 million active data users and 2.2 million Mobile Money subscribers across the portfolio. Our Ayoba messaging platform is now available across five markets and is already recording 515,000 active users per month.”

Overall, solid performances in Nigeria and Ghana offset the headwinds in South Africa, which was impacted by the weaker consumer demand and changes in ICASA’s End-User Subscriber Service Charter Regulations which have impacted out-of-bundle (OOB) usage. Notwithstanding these pressures, in the third quarter MTN South Africa saw an improving trend in both prepaid and enterprise service revenues. Consumer post-paid in South Africa remained strong in a competitive market with service revenue growing at 5,8%.

“The trend in consumer prepaid revenue in the September 2019 quarter was encouraging, with the decline in the three months moderating to 2,7% YoY compared to a 5,1% YoY decline in the three months to June 2019,” says MTN.“We remain focused on returning to growth, supported by stabilising trends in voice and improvements in data.”

Providing an update of the asset realisation programme (ARP), MTN Group CFO, Ralph Mupita says, “As at June 2019 we had achieved R2.1bn of the 3-year R15 billion target announced in March this year. We continue to make steady progress in this regard and, following American Towers Corporation’s announcement of its acquisition of Eaton Towers, we are in advanced discussions to dispose of our 49% holdings in ATC Ghana and ATC Uganda which we value at between R7bn and R8bn”.

“We expect an improved performance in South Africa in 2020 as the effects of the End User regulation on OOB usage moderate, the enterprise division returns to growth and the Cell C situation stabilises,” continues MTN. “We are confident that in Nigeria we will maintain service revenue and EBITDA growth in line with the medium-term guidance. This will be delivered as we improve our data revenue performance with increased 4G coverage as we utilise our 800 Mhz spectrum. We are also pushing ahead with our mobile money strategy through the super-agent licence, with 66,282 registered agents currently and a target of 100,000 by year-end.”

Shuter concludes, “Although conditions have been tougher in the year, we have sustained our performance in 2019 and looking forward, we are focussed on executing our BRIGHT strategy to deliver sustainable growth in our operations and to simplify our portfolio to reduce risk and improve returns. We remain resolute and committed to building our digital operator strategy and delivering on our medium-term targets and dividend policy”.

Edited by Jenna Cook

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