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Real Economy News in Real Time
R/€ = 16.33 Change: -0.05
R/$ = 15.08 Change: -0.08
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MTN achieves strong Q3 results on the back of Ghana, Nigeria performance

31st October 2019 BY: Natasha Odendaal
Creamer Media Senior Deputy Editor

Strong performances by MTN Ghana and MTN Nigeria have offset a weak performance from MTN South Africa during the nine months and quarter to September 30.

The South African operations were impacted on by weaker consumer demand, a weak economy, the implementation of lower out-of-bundle data prices, new data use rules and unrecognised roaming revenue from Cell C, while MTN Ghana and MTN Nigeria delivered double-digit service revenue growth and improved earnings before interest, taxes, depreciation and amortisation (Ebitda) margins.

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Year-on-year, this drove a 9.6% growth in group service revenue and Ebitda growth of 11.8% over the nine-month period to September 30.

The group’s Ebitda margin improved by 0.6 of a percentage point to 35.1%.

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“Service revenue growth and improvements in our Ebitda margin continued into the third quarter,” says MTN Group CEO Rob Shuter.

During the third quarter of the year, MTN South Africa saw an improving trend in both prepaid and enterprise service revenues, with overall service revenue growth of 0.4% in difficult trading conditions.

“If an accrual basis of accounting was applied to Cell C’s roaming revenue, MTN South Africa would have recorded service revenue growth of 3.5%,” the company explains.

MTN South Africa continues to account for Cell C roaming revenue on a cash basis and payments received since June 2019 have remained on schedule, with nearly R75-million paid to date.

As at June 2019, MTN had not recognised R393-million of unpaid revenue from its roaming agreement with Cell C and an impairment of R211-million had also been raised at the time.

Meanwhile, the group is on track with the delivery of its strategy across its markets.

“This is reflected in ongoing voice, data and fintech revenue growth of 4.4%, 21.5% and 30.9% respectively,” Shuter continues.

“Digital revenue declined by 46.4% as we continued to optimise our legacy value-added services (VAS) business. In Nigeria, we have achieved a return to positive quarter-on-quarter digital revenue growth following completion of the VAS optimisation in that market.”

During the quarter under review, MTN added 3.5-million subscribers, bringing its total subscriber base to 244-million customers across its 21 markets.

Subscribers in South Africa reduced slightly by 300 000 quarter-on-quarter, ending the quarter with a base of 28.9-million.

“We remain committed to driving access to the Internet and financial services and, in the third quarter, we added 4.7-million active data users and 2.2-million Mobile Money (MoMo) subscribers across the portfolio,” Shuter notes.

MTN’s Ayoba messaging platform is now available across five markets and is already recording 515 000 active users a month, while the scaling of its MoMo agency network in Nigeria continues under its super-agent licence, with 66 282 agents now registered.

MTN aims to have 100 000 agents registered by year-end.

“We continue to engage the Central Bank of Nigeria on our application for a payment service bank licence,” he says.

MTN also expects an improved performance in South Africa in 2020 as the effects of the end-user regulation on out-of-bundle use moderate, the enterprise division returns to growth and the Cell C situation stabilises.

“We are confident that, in Nigeria, we will maintain service revenue and Ebitda growth in line with the medium-term guidance. This will be delivered as we improve our data revenue performance with increased fourth-generation coverage as we use our 800 MHz spectrum.

“Although conditions have been tougher in the year, we have sustained our performance in 2019 and, looking forward, we are focussed on executing our Bright strategy to deliver sustainable growth in our operations and to simplify our portfolio to reduce risk and improve returns,” he concludes. 

EDITED BY: Creamer Media Reporter
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