MTN SA ‘turns’ the corner

By Gugu Lourie

What a festive season quarter has it been for MTN SA’s performance? The second half of the year, which includes the busy festive months, was stronger, pushing MTN’s fourth quarter up 28.1% quarter on quarter. The company, which has been facing stiff competition and regulatory pressure, claims it has finally turn the corner despite revenues dropping by 3.9%.

The company said it ‘delivered clear evidence of a turnaround’ in the second half of 2014.

As a result, MTN today announced that it has activated 2.7m new customers on its network in the second half of 2014 versus the 430, 496 net disconnections in the first half of the year. This pushed up prepaid users by 9.1% to 22.6m customers in 2014. The company said the post-paid segment delivered a significantly improved performance, reporting net subscriber additions of 414 251 for the year.

MTN SA, which is the second-largest mobile operator in the country, also reported that its total customers rose by 8.9% to 28m. “This was largely a result of segmented offerings based on usage, limited duration on-net promotions such as WOW and below-the-line advertising campaigns in the pre-paid segment,” the company said.

MTN and its rivals such as Vodacom, Millicom, Airtel Africa and Vodafone are seeking to redefine their role in the digital era as voice telephony revenues dwindles. They are focusing on providing digital lifestyle services such digital entertainment (MTN FrontRow video-on-demand), digital banks (MTN Mobile money), and my web: delivering services such as online shopping (Zando) and locate services, etc.

By year-end, MTN SA data revenue contributed 23,8% of total revenue from 21,4% in 2013.

MTN said while data revenue only rose 7% there was a meaningful improvement in the fourth quarter with mobile data revenue growth of 17% when compared to the same period last year. Fourth quarter 2014 on third quarter 2014 mobile data revenue growth was 42, 3%.

However, MTN SA reported a 3.9% decline in revenues to R39 billion due to a 36% drop in interconnect revenue due to lower mobile termination rates (MTRs).

The company said it continues to focus on improving profitability throughout the business and on various cost efficiencies, including managed services and optimising the distribution network.

MTN SA’s capex for the period of R5.6 billion was slightly lower than budget due to improved procurement

During the year, MTN added 520 new 2G sites and 904 3G sites. The company said 3G population coverage improved to 87%. As a result of improved performance in the second half (with voice traffic volumes up 31,0% year on year and growing demand for data), we will increase capex significantly in 2015.

“This will be focused on improving the quality and capacity of the 2G and 3G network and rolling out LTE,” said MTN SA.


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