MTN SA’s revenue falls 1.4% on strike action

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By Gugu Lourie


MTN South Africa, the country’s second biggest mobile phone operator, said the business continues to show encouraging growth in service revenue, driven mainly by data revenue despite total revenue dropping by 1.4% to R18.8 billion in the six months to end-June 2015.

The mobile operator attributed the poor performance to industrial action that took the company months to resolve and led to the departure of its CEO Ahmad Farroukh, who was replaced by Mteto Nyati. The strike took place between 20 May 2015 and 16 July 2015

The firm also blamed handset supply chain challenges for the poor figures, but said “corrective measures have been implemented to improve handset sales”.

But MTN SA managed to increased subscriber base by 1,8% to 28,5 million supported by attractive promotions and below-the-line campaigns in the pre-paid segment. The prepaid segment rose 2,7% to 23,2 million and contract subscribers declined by 1,7% to 5,3 million largely impacted by handset supply chain challenges.

The post paid segment might have also been impacted negatively the conutry’s third mobile operator Cell C’s Contract Buy Out offer. Cell C is dangling a whopping R10 000 reward to new customers who ditch contracts with Vodacom and MTN and sign up with it. Cell C has also introduced a Cell C Test SIM card pre-loaded with Cell C airtime to enable potential customers to test drive its ‘ever-improving network’.

Competition is heating up

Competition in the mobile phone space is heating up as many more new players are entering the saturated market, since they see potential for more growth especially in the provision of mobile data.

Two months ago, FNB, the oldest bank in South Africa, started offering its own SIM cards to its customers, setting its sights on growing market for users to take all telecoms service from it and becoming the first South African bank to offer mobile services.

In May, a mobile virtual network operator (MVNO) Me&You Mobile entered the market and promised to shake up the South African mobile market. While MTN South Africa has been hard hit by an industrial action and has appointed a new CEO Mteto Nyati to turnaround the business.

To remain competitive, MTN South Africa is planning to ramp up the rollout of its network expansion in the second half. In the six months to end-June, the company spent R4.7 billion in capex.

During the speriod, MTN South Africa added 267 new 2G sites and 1 939 largely co-located 3G sites and 1 891 LTE sites.

“The key focus during the first half was the expansion of 3G and LTE coverage and improved network  quality in key cities. Rollout is expected to ramp up in the second half of the year,” the company said.

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