MTN Group’s Revenue Increased 15%, Subscriber Base 1% in Q1 2016

• Launches first converged digital TV, OTT-VOD service

Emma Okonji with agency report

The MTN Group, wednesday announced a slight increase in its revenue and subscriber base for the first quarter of 2016, attributing the slow rise to the decline in the number of subscribers from its Nigeria and Uganda markets.

The MTN Executive Chairman, Phuthuma Nhleko, who made the disclosure during the group’s annual general meeting held yesterday in South Africa, said in a statement that “As at 30 April 2016, the company increased its subscriber base by approximately one per cent to 230.3 million year-on-year (YoY). This was largely impacted by the seven per cent decline in subscribers in MTN Nigeria and the 11 per cent decline in MTN Uganda, mainly as a result of the non-compliant subscriber deregistration process in these countries which was only completed in quarter one of 2016.”

MTN South Africa however reported a seven per cent increase YoY in subscribers supported by improvements in the prepaid distribution channel while MTN Ghana showed a healthy subscriber growth increasing its subscriber base by 20 per cent.

According to the statement, which was made available to THISDAY, the Group revenue increased by 15 per cent YoY, supported by a 21 per cent decline in the average rand exchange rate against the naira together with a 23 per cent decline in the average rand exchange rate against the US dollar compared with the previous period.
It said organic revenue increased marginally by 1 per cent, impacted by lower revenue growth in MTN Nigeria, MTN Uganda and MTN Cameroun.

The statement further explained that organic data revenue across the group continued to deliver satisfactory growth in most of its markets, increasing by 19 per cent YoY. Data now contributes 24 per cent to total revenue compared with 21 per cent for the same period last year. Data revenue was supported by healthy growth in MTN South Africa and MTN Ghana. MTN Nigeria’s data revenue declined 12 per cent mainly due to the withdrawing of regulatory services by the Nigerian Communications Commission (NCC).

The statement said MTN Nigeria’s organic revenue was down six per cent, mainly due to uncompetitive pricing arising from the suspension of regulatory services and regulatory restrictions that obliged operators to seek permission from customers to charge out-of-bundle rates upon the depletion of data bundles.

In all, MTN South Africa continued to show positive momentum and increased revenue four per cent on a yearly basis.
The rise is attributed to the 17 per cent increase in handset revenue and 23 per cent growth in data revenue driven by a 59 per cent yearly increase in data traffic as well as a 55 per cent increase in digital revenue.

The Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin remains under pressure. MTN Nigeria’s EBITDA margin was negatively impacted by dollar denominated costs related to the weaker exchange rate, costs associated with the second tranche of the tower transaction, increased use of build-to-suit sites and costs associated with the subscriber registration process.

Addressing the issue of the N1.04 trillion fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC), Nhleko said: “We continue our engagement with the Nigerian authorities and are awaiting feedback. We remain
optimistic on reaching a conclusion on this matter in the short term. We will continuously monitor developments with regards to the Nigerian fine and will review the adequacy of the provision at the end of the reporting period.”
Meanwhile, MTN Nigeria yesterday announced the launch of the pilot of its digital television broadcasting service in Jos, Plateau State, designed to move Nigerians into the era of telecommunications, broadcasting and media convergence.

The TV service, which goes live today, is sequel to the issuance of a digital broadcast licence to MTN by the Nigerian Broadcasting Corporation (NBC) last year.

Announcing the development, the Chief Executive Officer of MTN Nigeria, Mr. Ferdi Moolman, said: “MTN is committed to providing Nigerians with innovative digital platforms which will enhance the way we live, work and play. Once we commence full commercial activities, the TV service will deliver an exciting bouquet of rich local and international content to Nigerians. In addition, subscribers will have the freedom to watch their favourite programs when they choose to via MTN VOD service, rather than having to watch at a specific broadcast time. This will be the first fully converged broadcast and OTT-VOD service to launch in MTN.

“Indeed, the launch of MTN TV is another bold demonstration of MTN’s abiding faith in the future of Nigeria, driving growth and development by enabling Nigerians keep pace with the latest global trends and converged solutions,” Moolman said.

Elaborating further, MTN Nigeria Executive, Lynda Saint-Nwafor, said: “MTN’s vision is to lead the delivery of a bold new digital world. We are committed to exploring opportunities and avenues to expand our digital footprint and value offering to our customers. We are therefore constantly seeking appropriate channels to place the latest technologies and services in the hands of Nigerians, and this is one of such.”

MTN was issued with the 700MHz spectrum licence last year by the NBC, which is a digital broadcast licence that will enable MTN Nigeria deliver broadcasting services, along side its core data and voice service delivery in a globally converged economy.