MTN rise in revenue after double-digit growth in Nigeria and Ghana
MTN said the revenue came on the back of double-digit growth in Nigeria and Ghana. Chief executive Rob Shuter said that revenue at its home market of South Africa fell 6.2percent on roaming issues.
Last week, rival Vodacom said that group service revenue for the year ended in March had increased 5 percent. Vodacom said service revenue in South Africa grew 2.3 percent with data usage elasticity supporting recovery to growth in the second half.
Shuter said the local operation was negatively impacted by the wholesale business as it continued to account for Cell C roaming revenue on a cash basis and the loss of revenue from the Telkom roaming agreement which came to an end in June 2019.
“Wholesale revenue from South Africa had declined by 44percent year-on-year due to the roaming issues,” Shuter said.
“For Cell C specifically, roaming revenue continued to be accounted for on a cash basis in line with IFRS 15 and MTN SA recognised approximately R292million in revenue during the quarter. On March 31, 2020, R450m in Cell C revenue remained unrecognised.” Shuter said MTN SA commenced phase two of the roaming agreement with Cell C this month.
MTN also announced a 21percent cut in its capital expenditure guidance for 2020 due to supply chain disruptions as a result of the Coronavirus (Covid-19) pandemic.
The group updated the guidance to between R21billion and R22bn from R28.3bn that it previously predicted last year.
Shuter said MTN data and digital traffic surged in April as people from worked homes during the Covid-19 lockdown.
“Data traffic on our networks has, on aggregate, accelerated by more than 30 percent when comparing traffic levels at the end of April 2020 against February 2020, which is before Covid-19-related behaviour such as work-from-home began in earnest,” Shuter said.
Peter Takaendesa, head of equities at Mergence Investment Managers, said MTN put in huge amounts of capital into its network in South Africa over the past few years and they needed to capitalise on the investment to grow ahead of their competitors.
Takaendesa said they estimated that MTN, Cell C and Vodacom have continued to lose market share to Telkom mobile in South Africa during the period.
“MTN group is executing very well in the rest of Africa driving group service revenue growth over 10 percent despite weaker South African revenue,” Takaendesa said.
“Unfortunately, the market remains overly concerned about the potential impact of Covid-19 on most of those African countries and implications thereof on MTN’s financial position over the mid term.”
MTN shares declined 9.82percent on the JSE yesterday to close at R44.82.