JOHANNESBURG – MTN lost almost 2 million subscribers in South Africa in the six months to June and service revenue growth slowed by 3.3 percent in a stubbornly weak economy.
MTN, Africa’s telecoms giant, said it had 1.9 million less local subscribers compared to December, bringing the total subscribers to 29.2 million in the period under review, as price sensitive consumers opted for cheaper data offerings.
It has 1.1 million fewer active data subscribers, although postpaid customers increased marginally by 0.1 percent to 5.6 million.
MTN chief executive Rob Shuter said that the 1GB promotion had contributed to the decline.
“We had our famous 1GB promotion, which we decided was not generating value and we pulled it out of the market.A lot of those SIMs have since become dormant and contributed to the drop in prepaid users,” he said.
Shuter said delayed payments under the network roaming agreement with Cell C resulted in a R393 million impairment.
“We are evaluating a sustainable solution to the agreement with Cell C,” Shuter said.
The domestic prepaid service revenue declined 5.5 percent on the introduction of out of data bundle rates and regulations by the Independent Communications Authority of South Africa (Icasa).
Commenting on the recent release of the policy on high-demand spectrum and policy direction on the licensing of a Wireless Open Access Network, Shuter said it was a move in the right direction, and lacked detail.
“We are still not clear how much spectrum will be available to mobile operators,” said Shuter.
Overall the MTN group had strong subscriber growth of 7.7 million in the first six months of the year to reach a total of 240 million subscribers.
Peter Takaendesa, a portfolio manager at Mergence Capital, said that subscriber numbers were no longer a reliable measure of market share in South Africa, particularly in the high churn prepaid market.
“This MTN South Africa service revenue performance is a slightly better growth rate than flat service revenue reported by Vodacom South Africa over the same period.
"Both Vodacom and MTN have been affected more by the recent Icasa data regulations, and have had to re-price out-of-bundle data prices to reduce the gap with the smaller operators (Telkom mobile and Cell C),” he said.
MTN group service revenue increased by 9.7 percent to R67.9 billion and earnings before interest, taxation, depreciation and amortisation expanded by 10.2 percent to R31.2bn.
Nigeria was a star performer, after recognising an 11.4 percent growth in voice revenue, while data revenue rose by 31.8 percent.
Ofentse Dazela, the director for pricing research at Africa Analysis, said that MTN’s data bundles are priced slightly higher than those offered by competitors.
“Considering the popularity of data services at the moment, price sensitive customers on this network seemingly have decided to shop for better deals elsewhere,” Dazela said.
He also said that it was not surprising that MTN was doing well in the post-paid market.
“It is leading price-based competition in this segment, and it continues to offer better value to customers through aggressively-priced promotional offerings,” referring to offers to customers on the My MTNChoice 5GB data plan, who receive an additional 34GB of data free of charge.