MTN loses Nigerian users

Published Oct 24, 2014

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MTN GROUP, Africa’s largest mobile telecoms operator, slashed its full-year forecast for Nigerian subscriber growth by almost a third yesterday, raising concern about its ability to fight off competition in its top market and sending its shares sliding.

The Johannesburg-based company has been fighting to stay in the lead in Nigeria, Africa’s most populous country, ahead of competitors such as the United Arab Emirate’s Etisalat, India’s Bharti Airtel and privately-owned local firm Globacom.

It expects to add 3.5 million users in Africa’s biggest economy this year, from its previous forecast of 5 million. It has 58.4 million customers in Nigeria, a slight decrease from three months ago.

“That comes as a bit of a surprise. Many participants in the market were looking for a correction in Nigeria,” Nadim Mohammed, a telecoms industry analyst at First Avenue Investment Management said, referring to MTN’s revision to its subscribers forecast. “You’ve got a very capable regulator in the country now and they are doing the right things to promote competition, better costs to communicate and a better experience for the consumer. I am actually worried.”

Nigerian authorities this year fined MTN and two other operators a combined $4 million (R44m) and banned them from selling SIM cards, for poor service. Its Nigerian user base was also hit after Islamist group Boko Haram burnt down some radio masts.

“Performance was impacted by continued aggressive competition and stringent regulatory requirements,” chief executive Sifiso Dabengwa said.

Because of its dominant position, Nigerian regulators require MTN to offer customers and those of competing operators similar tariffs when using its network. To counter this MTN relied on short-term promotions to drive sales, but this too was banned.

“These regulatory actions are quite severe and it will be hard for MTN to resume anything close to double-digit (growth) again. At best, it will be single-digit positive revenue growth for the next while in Nigeria,” Mohammed said.

In South Africa, where it lags Vodacom, MTN said it had added 1.4 million new subscribers.

Shares fell 3.79 percent to close at R235.03 yesterday. – Reuters

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