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MTN Group swings into profit in 1H17; customer base falls

4 Aug 2017

South Africa-based MTN Group swung back into the black in H1 2017 and said it is on course to meet its full year financial guidance, as communicated in March 2017. Africa’s biggest mobile operator, which is also very active in the Middle East region, said its first-half results show it has hopefully overcome a difficult phase in 2016 that illustrated the risks associated with its emerging markets strategy. The 1H17 results it said, were boosted by the absence of charges related to a sizeable USD1.1 billion fine imposed by the Nigerian authorities in 2016 concerning a protracted dispute over unregistered SIM cards. ‘These numbers give us hope for the future. It’s a very encouraging platform upon which to build our strategy,’ said Rob Shuter, who took over as MTN’s chief executive in March. Shuter’s appointment is expected to put the company back on a growth path with a shift away from basic telecoms services towards offering its more than 200 million users the ability to pay bills or watch live football matches on their phones, Reuters reports.

Net profit attributed to shareholders reached ZAR5.207 billion (USD391 million) in the January-June period under review, reversing a loss of ZAR3.106 billion in the corresponding period a year ago. MTN Group revenue (in constant currency) grew by 6.7% year-on-year to ZAR64.315 billion (USD4.83 billion in H1 2017, underpinned by 10.8% growth in revenue in Nigeria and a 5.2%, on an organic basis, improvement in service revenue growth in South Africa. The company also said that MTN Uganda, MTN Ghana and MTN Ivory Coast contributed positively to the Group’s top-line growth, although MTN Cameroon experienced ‘a challenging period, negatively impacted by the data network shutdown in some parts of the country in the first quarter’. Group service revenue was up 7.5% y-o-y at ZAR60.003 billion, while data revenue climbed 31.9% to ZAR13.952 billion fuelled by rising demand for data – including usage of its MTN Mobile Money service which reported 2.7 million net additions to 17.9 million users at end-June 2017. EBITDA, however, declined by 3.1% on an annualised basis to ZAR21.179 billion; EBITDA margin slipped 4.2 percentage points to 32.9%.

As at 30 June 2017, the MTN Group reported a consolidated subscriber base of 231.8 million, down 3.6% y-o-y, impacted by a decline in subscriber numbers in MTN Nigeria and MTN Ghana. This was largely a result of the Group’s initiative to modernise subscriber definitions to reflect the business’s changing mix of revenue streams. The implementation of the modernised definitions continues and is expected to be completed by the end of the year, it said. In the first six months of this year, the Group continued to invest in the rollout of network and information technology across its markets. Capital expenditure was lower than expected, however, impacted by limited foreign currency availability in Nigeria, some execution challenges as well as the seasonality of the CAPEX cycle. In the period, a total of 4,404 3G and 3,478 4G co-located sites were rolled out, it added.

Nigeria, South Africa, MTN Group, MTN Nigeria

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