MTN South Africa muddles along in tough market

MTN South Africa lost 300 000 customers in the quarter ended 30 September 2019, but still managed to eke out service revenue growth of 0.4%. It ended the period with 28.9 million subscribers.

In the first nine months of the year, MTN Group’s home market reported a 4.6% decline in consumer prepaid service revenue, impacted by communications regulator Icasa’s data expiry rules, out-of-bundle data tariff reductions and a tough economic environment.

However, it said the trend in consumer prepaid revenue in the September quarter was “encouraging”, with the decline moderating to 2.7% year on year compared to a 5.1% decline in the previous quarter, also year on year.

“We remain focused on returning to growth, supported by stabilising trends in voice and improvements in data,” MTN said. “In the third quarter, data revenue showed encouraging year-on-year momentum with a return to positive growth recorded compared to a year-on-year decline in the second quarter ended June 2019.”

MTN blamed the fall in subscriber numbers on the discontinuation of a 1GB acquisition promotion in prepaid, which resulted in a 400 000 reduction in subscribers to a closing base at the end of the September quarter of about 23 million. “We anticipate a normalisation of the base and customer profile by the first half of 2020.”

By contrast, the consumer post-paid business delivered service revenue growth of 5.8% year on year “in a highly competitive market”.

‘Muted’

“Net (post-paid) subscriber additions of 80 620 quarter on quarter were relatively muted, reflecting the tough trading environment and lower acquisition volumes as we continued to implement stricter vetting rules aimed at reducing credit risk and enhancing subscriber quality.”

Wholesale revenue grew by 59.4% year on year, and included Telkom roaming revenues for the first six months (this contract ended in June) as well as Cell C roaming revenues for the first four months of the year.

MTN said Cell C fulfilled all its commitments in line with a revised payment plan. If an accrual basis of accounting was applied to Cell C roaming revenue, MTN South Africa would have recorded service revenue growth of 3.5%.

The enterprise business improved, though still reported a decline in service revenue of 7% year on year for the first nine months of the year (compared to a 7.9% decline in June).

For the three months to September 2019, the year-on-year decline was 5%.

“We are focused on further improving this trend, supported by reduced churn, strong growth in the enterprise business base with significant contract wins across the large enterprises and public sector segments. We expect these interventions to impact positively on the next few quarters as we target a return to year-on-year growth in the fourth quarter.”  — © 2019 NewsCentral Media