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MTN rides 'perfect storm' of challenges in H1

8 Aug 2016

South Africa-based MTN Group – operating in 22 countries across Africa and the Middle East – issued its report for the six months ended 30 June 2016, noting that its financial performance for the period reflected the confluence of a number of material issues which created a ‘perfect storm’. Results were significantly impacted by MTN Nigeria agreeing to pay a government fine worth USD1.671 billion over three years, whilst the depreciation of local currencies against the US dollar had a substantial impact, and performance was also hit by weak macro-economic conditions affecting consumer spending, the July 2015-to-May 2016 withdrawal of regulatory services from MTN Nigeria, and subscriber disconnections related to mobile user registration requirements, mainly in Nigeria. Group results were also affected by aggressive price competition and under-performance of MTN South Africa. On the positive side, the company highlighted that MTN Irancell, MTN Ghana and MTN Cyprus delivered strong operational and financial performances for the period.

For the first six months of the year consolidated revenue increased by 14.0% year-on-year to ZAR78.878 billion (USD5.736 billion), including data revenue which grew by 32.2% to ZAR19.849 billion, as data traffic increased by 135.3% (compared to a 7.9% rise in voice traffic). CAPEX was raised by 27.4% to ZAR13.850 billion. EBITDA decreased by 3.3% to ZAR29.273 billion, whilst six-month net loss attributable to controlling shareholders was ZAR5.489 billion, a huge swing from net profit of ZAR11.900 billion posted in 1H15.

Group subscribers remained flat compared to the start of the year at 232.6 million at 30 June 2016, following 6.6 million mobile subscriber disconnections over the six-month period in Nigeria, Uganda and Cameroon. Since October 2015 approximately 18 million subscribers across the MTN Group were disconnected to ensure compliance with subscriber registration processes. MTN South Africa reported a decline in subscriber numbers in 1H16 – down 2.6% to 29.8 million – mainly as a result of strong competition and economic pressure in a highly penetrated market.

South Africa, MTN Group, MTN South Africa

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