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MTN performance hampered by strike

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The performance of MTN South Africa during the six months ended 30 June 2015 was hampered by handset supply chain challenges and industrial strike action during the period. Despite this, the operation continued to show encouraging growth in service revenue, driven mainly by data revenue.The group increased its subscribers by 3,4% to 231-million during the period.

Revenue decreased 4,9% (increased 0,7%*)to R69,21-billion. Data revenue increased 21,3% to R15,412-billion while voice traffic and data traffic increased 11,2% and 87% respectively.
EBITDA decreased 10,1% (decreased 4,2%*) to R30,274-billion and EBITDA margin decreased 2,6 percentage points to 43,7%. Headline earnings per share (HEPS) decreased 10,3% to 654 cents. The group declared an interim dividend of 480 cents per share and capex increased 18% to R10,852-billion.

The results for the six months are reflective of a challenging operating environment and lower than expected performance in parts of the business. A difficult regulatory environment and weak macro-economic conditions continue to impact the group’s performance. Reported financial results were further impacted by unfavourable exchange rate movements.

MTN continued to focus on improving network quality, increasing capacity and expanding the footprint of our 3G, LTE and fibre networks. During the period, the Group’s operations rolled out 1 335 2G, 5 048 largely co-located 3G and 2 475 LTE sites as well as 722km of long distance fibre.

Moving into the second half of the year the group will aim for an increased focus on building staff engagement and improving customer service in the South African operation. The operation will also accelerate its capex plans to support medium term growth prospects, particularly in the data area.

Meanwhile, corrective measures have been implemented to improve handset sales.

MTN Nigeria, which experienced a difficult six months, is expected to remain challenging for the rest of the year. The company will place a strong focus on active subscriber management and providing more competitive voice and data offerings to high value customers.

Overall, the company aims to increase data revenue by encouraging uptake through increased smartphone penetration and new pricing strategies. It will also continue to create a distinct customer experience through investing in our networks to support data growth and improving value and segmentation offers.

The continued rollout of MTN Mobile Money and broader financial services remains a priority as well as developing its digital offering with partner Rocket Internet through the investment in Africa Internet Holdings and Middle East Internet Holdings.

Over the past six months the group focused on improving its business structure to facilitate non-voice revenue growth. Dedicated group consumer and group digital functions have been established to ensure MTN is well positioned to participate in a rapidly evolving industry, effectively meeting customers’ needs through digital, financial and enterprise services.

The continued transformation of our operating model remains a key focus and has supported the EBITDA margin for the period.

Key initiatives include:
* The continued rollout of Project Next!, with the completion in Cameroon expected September 2015 and Benin and Management companies to be completed by year end;
* Implementation of an integrated charging system under a managed services platform, enabling access to skilled resources and end-to-end accountability;
* Leveraging global procurement and expediting time to market.