MTN loses subscribers in SA, but gains in active data
DURBAN – Mobile operator MTN has reported a decline of 300 000 subscribers in South Africa in the quarter to end September, which it attributes to a weak economy, the implementation of lower out-of-bundle data prices, new data usage rules and unrecognised roaming revenue from Cell C.
However, overall MTN grew its subscribers by 3.5 million, but reported yesterday that in the third quarter it had 28.95 million subscribers in South Africa, down from 29.25 million subscribers compared to the second quarter to the end of June.
The group’s active data subscribers increased by 4.7 million quarter-on-quarter to 87 million subscribers. It now serves 244 million customers across 21 markets.
In the nine-month period, the group’s service revenue increased by 9.6 percent and its earnings before interest, tax, depreciation and amortisation (Ebitda) margin improved by 0.6 percent to 35.1 percent.
Chief executive Rob Shuter said service revenue growth and improvements in the group’s Ebitda margin had continued into the third quarter of the year.
“We remain committed to driving access to internet and financial services and in the third quarter we added 4.7 million active data users and 2.2 million Mobile Money subscribers across the portfolio. Our Ayoba messaging platform is now available across five markets and is already recording 515 000 active users per month,” Shuter said.
MTN South Africa service revenue only increased by 0.4 percent year-on-year, with an Ebitda margin of 36.6 percent.
Looking ahead, Shuter said that although South African conditions had been tougher in the year, they had sustained its performance in 2019.
“We are focused on executing our Bright strategy to deliver sustainable growth in our operations and to simplify our portfolio to reduce risk and improve returns,” he said.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said MTN South Africa’s reported flat service revenue was below expectations largely due to the way they had accounted for revenue from Cell C.
“The normalised growth rate is a bit better than what they have reported. As we have seen with Vodacom’s and Cell C’s last reported results, South Africa mobile service revenue is about flat for the big three operators,” Takaendesa said.
He added that Telkom mobile was gaining market share and growing much faster than its peers.
“MTN has done very well with improving its mobile network capacity and performance in South Africa. They have to take advantage of that position and grow market share. The key challenges for the big two mobile operators are delayed 4G spectrum allocation and data pricing pressure from regulatory intervention as well as increased competition from Telkom mobile at a time the weaker economy is continuing to put pressure on the consumer,” Takaendesa said.
MTN shares closed 09.01 percent higher at R93.59 on the JSE yesterday.