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  • MTN Group’s revenue rises by 11%, subscribers now 257.3m

     Willy updated 1 month ago 4 Members · 4 Posts
  • Lois

    Member
    May 17, 2020 at 5:33 pm

    MTN Group on Thursday said strong growth in Nigeria and Ghana helped offset lower revenues in its home market South Africa.

    The telco said it delivered a solid performance in the first quarter (Q1) this year, boosting service revenue by 11.1 per cent and increasing service revenue by 16.5 per cent to ZAR 38.7 billion.

    Its earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 15.6 per cent, with the EBITDA margin improving by 2.1 percentage points to 43.2 percent, in line with medium-term targets.

    The Group recorded voice, data and financial technology (fintech) revenue growth of 6.3 per cent, 26.4 per cent and 26.0 per cent respectively. Mobile subscribers rose by 6.6 per cent to 257.3 million across its 21 operations. Active data subscribers increased by 2.9 million to 98.3 million, while active mobile money customers increased by 0.4 million to 35.1 million.

    MTN said the COVID-19 situation is an evolving one and will undoubtedly affect the year ahead. Given the uncertainties associated with the duration and economic impact of the pandemic, it is difficult to reliably quantify the financial effects on the business at this early stage. However, the company has lowered its capex budget for the year on expected disruptions to the supply chain and challenges rolling out under lockdown rules, combined with a focus on preserving liquidity. As a result, MTN expects to invest ZAR 21-22 billion this year, compared to the ZAR 28 billion forecast at the full-year results. It will also continue with its cost control efforts as part of its medium-term strategy.

    Its Nigerian subsidiary, MTN Nigeria, had announced its financial report for the first quarter of 2020 with good numbers. The telco added 4.2 million new subscribers in the first quarter. Its total number of subscribers now stands at 68.5 million, the largest in the country while its revenue also witnessed impressive growth as it raked in ?329.2 billion ($845.4 million) during this period, a 16.7per cent growth from the same period a year ago. Profits after tax increased by 5.3per cent to ?51.02 billion ($131.1 million).

    The telco said it is witnessing a dip in voice traffic, especially in its mass market.

    “Voice revenue has experienced an immediate impact from the current macro disruptions,” MTN wrote.

    The slump started in late March as the coronavirus and the dip in oil prices began to affect the economy. Both developments have caused “a slowdown in economic activity and a reduction in people’s earning capacity,” the telco said.

    While voice revenue took a dip, data traffic rise fast. MTN said traffic patterns changed following the presidential lockdown of Lagos, Abuja and Ogun States as part of initial responses to tackle the COVID-19 pandemic.

    “We started experiencing a change in traffic patterns with a drop in voice traffic which was partially offset by an increase in data traffic on the network,” MTN wrote in the report.

    Data traffic spiked as subscribers “began to adopt digital channels for most of their activities and routines including telecommuting, entertainment and social media engagements.”

    Following the outbreak of the pandemic, people have switched to WhatsApp, Telegram, Zoom and Google Meets for text and group calls. In less than two months, Zoom grew from 10 million to 300 million users globally. Telegram recently hit 400 million daily active users.

    This trend is expected to have a positive impact on the telco’s data services. Between January and March, the company’s total number of active data subscribers jumped by 1.7 million to 26.8 million. Data revenue equally witnessed growth as it increased 59.2per cent during the first quarter.

    However, despite the growth in data services, MTN will face revenue challenges in subsequent quarters. Data revenue is still a relatively small part of MTN’s revenue. In Q1 2019, it represented just 16.6per cent of the company’s earnings. Even with its 59.2per cent growth in the first three months of 2020, it only accounts for only 22per cent of the telco’s ?329.2 billion 2020 earnings.

    Voice traffic remains MTN’s biggest revenue base. In Q1 2019 it represented 75.9% of all its earnings. And in 2020, phone calls brought in over ?227 billion during the first three months of the year, representing over 68% of the company’s total revenue.

    The adoption of digital services for voice and video calls is showing, once again, how vulnerable telecom companies are to internet platforms. “Although we have witnessed growth in data revenue,” MTN said in its latest report, “it does not fully offset the decline in voice revenue.”

    This explains why telcos considered the option of blocking internet services a few years ago. In Nigeria, the first sign of trouble was in 2013 when telcos saw a 30per cent decline in revenue from international calls between October 2013 and December 2013.

    Since then, telcos have lost the SMS market to instant messaging apps like Telegram, WhatsApp and even Twitter. They were slow to predict and develop social media platforms to rival Facebook or other platforms for video calls, voice calls or content streaming.

    Only few telcos have developed rival products. MTN Group, parent company of MTN Nigeria, developed Ayoba, a social media platform, in 2018. It also acquired Simfy Africa, a music streaming platform in 2018, and relaunching it as MusicTime! In late 2019. Other diversification plans include the development of fintech services like mobile money solutions.

    However, the dilemma for MTN and other telcos is that they have to spend more on critical infrastructure to improve internet access or risk losing data subscribers to competitors. In Nigeria, their operating costs are rising due to the foreign exchange regime. Meanwhile, alternative internet service providers like Smile, Spectranet, Tizeti, Swift and NTEL are becoming interesting rivals.

    MTN has the largest 4G coverage in the country. It was 24per cent early last year but has since risen to 44per cent. However, in 2018, the company had 5.76 million 4G subscribers, the highest in the country according to the NCC. Meanwhile smaller companies like NTEL and Smile had 538,308 and 237,066 4G subscriptions respectively.

    These look like small figures, but they are really not. Globacom and 9Mobile had 911,701 and 901,771 4G subscribers in 2018. In perspective, these two companies had over 60 million mobile users that year compared to Smile and ntel that had less than 1 million users combined.

  • Abigee

    Member
    May 29, 2020 at 3:07 am

    wow…..Really

  • Edutainment

    Member
    June 7, 2020 at 1:29 am

    congratulations

  • Willy

    Member
    June 7, 2020 at 1:11 pm

    Cool

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