Mobile operator MTN released its half-year earnings for the first part of this year today, and as expected, it wasn’t too great.
The $1.6 billion regulatory fine that MTN had to pay the Nigerian government naturally made a serious dent in its results.
“The last six months have been the most difficult for MTN, with the conflation of many negative things. But the important point is that we are now over the worst part of the perfect storm,” explained Phutuma Nhleko, MTN’s acting Chair.
Tying in with the Nigerian fine, MTN also had to disconnect 18 million subscribers since October last year across the group, in order to be compliant with regulatory processes. In South Africa, the operator saw a decline of 2,6% in subscriber numbers to 29.8 million.
That also saw the Group’s subscriber numbers remaining flat at 232.6 million across all of its operations.
Nhleko explained what impact the Nigerian fine had.
“What was negative, was the fine. We eventually settled, but it took much longer than what we anticipated. It wasn’t only a matter of what needs to be paid, but it impacted the entire operation. We couldn’t put out any promotions while the discussions were ongoing,” he said.
South Africa and Nigeria are the two biggest markets for MTN’s operations.
In terms of MTN’s SA revenue, Nhleko said the operator expected good earnings since the second half of last year was pretty good, but “there is room for improvement,” he said. He added that in order to push things through, the company will be embarking on a huge drive regarding its LTE services.
LTE services will also be launching in Nigeria soon, so that could give MTN the push that it needs.
“The challenges from the first half of the year are now behind us. The Nigeria fine closes the chapter in our tough history, and Nigeria should also benefit in the second half from the launch of LTE services there. For South Africa, we expect an improvement in the second half, also making progress with LTE,” he said.
But in general, MTN took a beating in the first half of the year.
For South Africa, the company reported a lower-than-expected performance, which it blamed on network outages in some areas, stiff competition and consumer spending.
Breaking down the subscriber numbers, MTN lost 2.7% of its pre-paid market (sitting at 24.7 million subscribers), while it also lost 2.1% of its contract subscribers – currently at 5.1 million.
The company still made positive revenue though, but it was lower than what was expected. Revenue increased by only 5.1% to R19 billion – and that has been pinned on subscribers using more data and buying devices.
How much data are people using? Well, enough for it to have jumped 19% in revenue to make up 34% of MTN’s total revenue.
The increase in revenue from devices also isn’t that big of a surprise, as handsets are getting more expensive (seemingly by the month).
“The number of smartphones on the network increased by 18.4% to 9.3 million while megabytes per user increased 53.8% for the period. Device sales in the previous comparable period were impacted by the industrial strike action and supply chain challenges,” MTN said in a media statement.[Image – MTN]