MTN dips on customer losses
But revenue up 7.1% in line with acceleration forecast
MTN’s share price fell 2.51% on Wednesday to close at R123.62 after the group reported a drop in subscriber numbers for the first quarter of 2017.
The group said its total subscriber base shrank 1.5% to 237-million because of the restatement to subscriber numbers in Ghana, Rwanda as well as in Zambia.
But revenue rose 7.1% in line with expectations of an acceleration to high single digits compared with low single digits during 2016’s matching period, said Mergence Investments portfolio manager Peter Takaendesa.
"There was no material impact on revenue growth so the subscriber ‘restatements’ must have been mostly low revenue customers," he said.
MTN Ghana’s customers declined by 2.5-million to 16.7-million as a result of the review of subscriber definitions, while in Zambia, it was down 5.1% to 5.5-million during the period.
MTN Nigeria’s customer base was down 2.3% to 60.5-million because of new regulations that require all subscriber connections and registrations to take place in permanent brick-and-mortar structures.
This led to a marked reduction in gross connections across the industry, said MTN Group CEO Rob Shuter.
"MTN Nigeria has also continued with the process of excluding subscribers whose only activity is receiving incoming SMSes," Shuter said.
The South African operations lost about 533,000 customers to 30.2-million. However, it is still aiming to add 630,000 new customers by the end of 2017.
Shuter said the subscriber numbers were lower than expected and that the group was planning to "further modernise our internal subscriber definitions to more closely align with the changing mix of revenue streams".
MTN was making progress on "tackling our underperformance" in the postpaid or contract segment in SA, "although it will take time for this to reflect in our financial performance". MTN’s contract subscribers declined to 5.16-million from 5.185-million in the fourth quarter of 2016.
"The priorities for the South Africa business remain driving network quality, offering attractive value propositions and improving the customer experience," he said.
MTN Nigeria had a strong start to the year, with an 11.6% increase in total revenue supported by a 71.3% increase in data revenue.
Data growth continues to boost MTN’s performance across its operations. Total data revenue was up 29.4% year on year and contributed 20% to total revenue. The group continues to invest in its network in all its operations. So far this year it has invested R4.6bn.
Frost & Sullivan senior industry analyst Naila Govan-Vassen said MTN Group’s focus on data and digital services was crucial to alleviate the increasing pressures on voice and messaging revenues.
Takaendesa said most of the preconditions for a successful turnaround of the firm were now in place and "we believe it’s now only a question of how long the new management will take to deliver the fruits of the cumulative investments made over the past year".