MTN reports growth in tough climate

MTN Group grew its subscribers by 2,5-million to 225,4-million in the quarter ended 30 September 2018.

Active data subscribers increased by 5-million to 74,2-million during the period, while active MTN Mobile Money customers increased by 1,7-million to 25,8-million.

Group service revenue increased year-on-year (YoY) by 10%, with group data revenue up by 23,9%.

MTN South Africa service revenue increased YoY by 3% with an EBITDA margin of 34,5%; MTN Nigeria service revenue increased YoY by 17,4% with an EBITDA margin of 43,2%; MTN Ghana service revenue increased YoY by 22,9% with an EBITDA margin of 37,6%; and MTN Irancell service revenue increased YoY by 14,1% with an EBITDA margin of 35,3%.

MTN Group president and CEO Rob Shuter comments: “MTN recorded an improved operational performance in many markets in the third quarter. Group service revenue grew by 10% year on year, ahead of our medium-term target of upper-single-digit growth, supported by continued strong growth in voice and data revenue. These results were delivered in challenging operating and currency conditions.

“Group outgoing voice revenue increased by 5,2% and data revenue increased by 23,9%. Higher digital revenue was led by robust growth in MTN Mobile Money.

“The group benefited from the particularly strong performance of operations in Nigeria and Ghana, while some operations in our West and Central Africa (WECA) region remained under pressure. MTN South Africa continues to execute on operational improvements.

“We made good progress on our key growth drivers of data and digital services, adding 5-million active data subscribers and 1,7-million new MoMo subscribers in the quarter,” Shuter adds.

“We successfully completed the listing of MTN Ghana. MTN Nigeria’s plans to list have been challenged by the recent Central Bank of Nigeria and Attorney General of the Federal Republic of Nigeria matters, however, MTN remains committed to the listing in Nigeria and work continues in this regard. In the quarter, the group engaged extensively with authorities in Nigeria to deal with the matters they raised.

“Across our markets, we continued to invest in our networks, and now have the leading network net promoter score in 10 of our markets. Reported capital expenditure to the end of the September 2018 was R16,4 billion, a group capex intensity of 16,9%,” he adds.

“We continued to optimise our balance sheet structure and reduced our gross US dollar debt by approximately $400-million. This was supported by proceeds from the sale of MTN Cyprus of $303-million, the settlement of a loan from our Ugandan Tower Company of $34-million as well as the proceeds from the MTN Ghana listing of $202-million received after the quarter’s end.

“We also concluded the refinancing of our $1,25-billion revolving credit facilities that are maturing in 2019 with a new five-year revolving credit facility of $1,25-billion at an improved margin, and with an option to increase to $1,5-billion.

“We continue to focus on operational improvements across our business and continue to develop our digital businesses.”

MTN South Africa recorded YoY service revenue growth of 3%, edging closer to our medium-term target of mid-single-digit growth. Data and digital revenue increased by 12,5% and 9,9% respectively, while outgoing voice revenue declined by 8,4%.

In a weak economy, consumers felt the pressure of a higher VAT rate, becoming increasingly price sensitive. Prepaid service revenue increased 0,5% and postpaid service revenue increased by 1,9%.

MTN South Africa took steps to transform data prices, including introducing attractive social media bundles and CVM offerings. As a result, customers optimised their data and voice spend and the number of active data subscribers increased by 6,7% QoQ to 13,5-million.

The consumer postpaid business maintained its positive momentum; the stabilisation of the enterprise business continued and the wholesale business gained traction. At the end of the quarter, we had 23,7-million prepaid users (down 3,4% QoQ), 2,9-million postpaid subscribers (up 2,1% QoQ) and 2,8-million telemetry subscribers.

The Cell C roaming agreement is contributing positively towards revenue and EBITDA and is expected to be fully implemented in line with planned timelines.

MTN South Africa’s margin on earnings before interest, taxation, depreciation and amortisation (EBITDA) was little changed YoY at 34,5% from 34,8%. The lower sequential EBITDA margin was largely impacted by higher device prices following the weakness in the rand exchange rate and increased device sales in the quarter.

In the quarter, OpenSignal rated MTN South Africa as having the widest 4G coverage, supporting our return to the number one net promoter score (NPS) position.

MTN is consulting with ICASA on the implementation of the new data pricing regulations and is proactively implementing the various changes to which it has committed.

MTN Nigeria had an excellent quarter, increasing service revenue by 17,4% YoY, towards the upper end of our medium-term target for Nigeria of double-digit growth.

This was led by a 52,5% increase in data revenue and 21,5% increase in outgoing voice revenue. Data revenue growth was supported by an increase in active data subscribers as well as more smartphones on our network, the result of various CVM and OEM-partnership initiatives.

Digital revenue declined by 28,5% following the continued optimisation of our value-added services (VAS) business.

MTN completed the final element of this optimisation, suspending auto-renewal of subscriptions, in mid-September which means that digital revenue will continue to be impacted by lower VAS revenue in the fourth quarter, after which it is expected to stabilise.

MTN Nigeria reported 17,2-million active data subscribers, up 15,1% QoQ, and 2,5-million MoMo customers, up 12,4% QoQ.

The EBITDA margin expanded to 43,2% in the first nine months of the year, up 4,7 percentage points from end-September 2017, driven by the strong growth in revenue, mix of revenue and further cost optimisation efforts.

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