MTN talks up SA turnaround

MTN South Africa showed ‘clear evidence’ of a ‘successful turnaround’ in the second half of 2014, despite reporting a 3.9% decline in FY revenue.

MTN South Africa showed “clear evidence” of a “successful turnaround” in the second half of 2014, the mobile operator said on Wednesday, despite the operation reporting a 3.9% decline in revenue and a sharp decline in operating margins.

For the year ended December 31 2014, MTN South Africa’s margin — measured using earnings before interest, tax, depreciation and amortisation (Ebitda) — fell by 2.6 percentage points to 32.1%. Even MTN’s data revenue, the area of strongest growth in South Africa’s mobile industry, showed a meagre 7% improvement for the full year.

“MTN South Africa’s performance was in line with our expectations and provided clear evidence in the second half of a successful turnaround with consistent month-on-month improvements in the last six months of the year,” MTN Group told shareholders.

In the fourth quarter, MTN South Africa’s Ebitda margin increased by 28.1% over the previous three months, despite what MTN called a “challenging consumer environment”.

The operation increased its subscriber base by 8.9% to 28 million, reporting 2.7 million net additions in the second half versus the 430 496 net disconnections recorded in the first half of the year.

“This was largely a result of segmented offerings based on usage, limited duration on-net promotions such as Wow and below-the-line advertising campaigns in the prepaid segment. As a result, the prepaid subscriber base increased by 9.1% to 22.6 million,” MTN said.

“The post-paid segment delivered a significantly improved performance, reporting net subscriber additions of 414 251 for the year. This was supported by a variety of revised offers.”

MTN South Africa’s revenue declined by 3.9% to R38.9 billion. This was mainly a result of a 36% decline in interconnection revenue due to lower mobile termination rates — the regulated fees operators charge each other to carry calls between their networks.

Although data revenue increased by only 7%, there was “a meaningful improvement in the fourth quarter with mobile data revenue growth of 17% when compared to the same period last year”.

“Fourth quarter 2014 on third quarter 2014 mobile data revenue growth was 42.3%. Increased 3G coverage, improved smartphone adoption and tailored data bundles were the main contributors to this growth,” it said.

“By year-end, data revenue contributed 23.8% of total revenue, from 21.4% in 2013.”

The number of smartphones on MTN’s network increased by 17.8% to 5.9 million, and the number of data users increased by 20.1% to 17.1 million.

Capital expenditure was R5.7 billion, “slightly lower than budget” as a result of improvements to procurement processes. MTN South Africa added 520 new 2G sites and 904 3G sites in 2014. It intends increasing capex “significantly” in 2015.  — © 2015 NewsCentral Media

This article was published on Moneyweb with permission from TechCentral. To view the original, please click here.

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