Regulations, currency exchange rates hit MTN results

MTN Group today announced an increase in revenue and subscribers for the year ended 31 December 2009, they however admitted a negative impact due to the economic crisis, the introduction of new regulations such as SIM registration and foreign currency translations.

“The solid performance of MTN operations in most of the countries in which the Group has a presence was achieved despite economic challenges, increased regulatory changes and growing competition. Continued delivery in accordance with an aggressive network rollout strategy remained key throughout 2009, enabling MTN to maintain or improve its market share in most of its operations.

Better distribution and a focus on segmental product offerings were other contributory factors. As a result, subscribers increased by 28,0% to 116,0 million for the period under review, indicating a continuing demand for mobile services in countries where mobile penetration is still relatively low”, said MTN Group President and CEO Phuthuma Nhleko, who announced he will no longer renew its contract with MTN in June 2010, but will continue as agreed in his current role up to March 2011.

According to the group’s results, overall revenue increased by 9,2% to R111,9 billion and earnings before interest, tax and depreciation (EBITDA) by 6,7% to R46,1 billion, although movements in exchange rates in the South African Rand and Nigerian Naira had a substantially negative impact on the Group’s financial results. To illustrate this, had there been no change in currency rates during the year, reported revenues at year end would have been 11 percentage points higher, and EBITDA 12 percentage points above that reported.

During last year, the group consolidated its investments in Internet Service Providers (ISP) and in various submarine cables for access to high-speed connectivity and improved voice and data offerings. MTN has contributed over $191 million to the East Africa submarine cable (EASSy); the Europe India gateway (EIG); SAT-3/SAFE; the East Africa Marine system (TEAMs) and the West Africa Cable System (WACS).

Also, MTN South Africa acquired Verizon Business South Africa in early 2009 and integrated the company with Network Solutions. The company also increased its stake in MTN Uganda and bought a 59% stake in iTalk Celular and a 20% stake in Belgacom International Carrier Services, among others.

Furthermore, it focused on converged services to the corporate market with the launch of MTN Business, headquartered in South Africa, and launched Mobile Money transfer services in 7 African countries, starting with Uganda in March last year. To date, Uganda has more than 680,000 Mobile Money subscribers.

In South Africa, the operator’s revenue increased modestly by 3,1% to R33,1 billion last year compared to 2008.

MTN South Africa increased its capacity by 12% on 2G and 22% on 3G networks, with the 3G population coverage up to 48% in 2009 compared to only 35% in the previous year. The company deployed a further 245 km of national optic fibre on the Gauteng-Durban route.

In Nigeria, MTN grew its subscriber base by 34% to 30,8 million at the end of December 2009 and increased its market share to 49,6%. The company continued its network rollouts, with 1,562 km of new backbone and 110 km of metro fibre being introduced during the year.

MTN registered subscriber increases in Ghana, Syria and Iran, by 24%, 45% and 20% respectively and strengthened its 3G mobile offering in these countries.

For 2010, the group expects an additional 800 000 subscribers for South Africa and Ghana and a 6 000 000 increase in mobile users in Nigeria.

Launched in 1994, MTN Group is a multinational telecommunications group, operating in 21 countries in Africa, Asia and the Middle East. MTN recorded 116,0 million subscribers across its operations in Afghanistan, Benin, Botswana, Cameroon, Cote d’Ivoire, Cyprus, Ghana, Guinea Bissau, Guinea Republic, Iran, Liberia, Nigeria, Republic of Congo (Congo Brazzaville), Rwanda, South Africa, Sudan, Swaziland, Syria, Uganda, Yemen and Zambia.