Margins jump as MTN South Africa delivers strong quarterly growth

MTN’s South African subsidiary is flying. MTN Group reported on Wednesday that quarterly profit margins at the unit expanded significantly on the back of solid service revenue growth.

Margin, measured using earnings before interest, tax, depreciation and amortisation (Ebitda), grew to 39.8% from 36.6% a year ago.

“This was achieved through ongoing momentum in commercial execution, market share gains and cost optimisation. All core business units — consumer business unit (CBU) prepaid, CBU postpaid, EBU and wholesale — showed strong and sustained growth for the quarter,” MTN said.

MTN South Africa’s total subscribers increased by about 95 000 in the quarter to 32.1 million, with post-paid subscribers up around 79 000 to record a base of 6.8 million, although that includes Internet-of-things endpoints. The prepaid subscriber base closed March at 25.3 million, with 16 000 subscribers added in the quarter.

Mobile data revenue grew by 18.5% driven by data traffic growth, which increased by 76.3%. “This momentum in traffic volumes was supported by the continued availability of temporary high-demand spectrum assigned by the Independent Communications Authority of South Africa.”

Data hungry

MTN said effective data prices on its network in South Africa fell by a further 33%. Active prepaid data subscribers now consume about 2GB/month of data, on average, with the active post-paid data subscriber using nearly 10GB of data per month.

The consumer post-paid business “remained resilient in a highly competitive trading environment”, with service revenue growth of 10.5% achieved, mainly through “healthy subscriber growth, well-managed churn and driving competitive deals in the market where the uptake of MTN South Africa’s data-first offers remained particularly robust”.

The enterprise business unit recorded service revenue up 17.3% on the back of ongoing demand for work- and learn-from-home solutions, MTN said. “This brings the enterprise business to its seventh consecutive quarter of growth. The pace of enterprise service revenue growth could moderate for the remainder of the year due to base effects in 2020,” it warned.

On mobile money, MTN said its relaunched MoMo offering in South Africa had signed up 3.1 million users by the end of March. “The focus remains on scaling the MoMo business and deepening financial inclusion through driving adoption as well as innovative and relevant service offerings.”  — © 2021 NewsCentral Media