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MTN GROUP LIMITED - Quarterly update for the period ended 31 March 2015

Release Date: 23/04/2015 07:05
Code(s): MTN     PDF:  
Wrap Text
Quarterly update for the period ended 31 March 2015

MTN Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1994/009584/06
ISIN: ZAE000042164
Share code: MTN
(“MTN” or “the Group”)

Quarterly update for the period ended 31 March 2015

MTN is a leading emerging market mobile operator, connecting approximately 228 million people in 22 countries across
Africa and the Middle East. MTN is at the forefront of global technological changes, delivering a bold, new digital world
to our customers. 

MTN Group records 227,5 million subscribers 

Highlights

- Satisfactory subscriber growth of 1,8% quarter-on-quarter (QoQ), adding 4,1 million subscribers 
- Muted subscriber growth in South Africa due to delays in engaging a replacement distributor and reduced handset
  sales
- Satisfactory subscriber growth in Nigeria of 2,1%, despite a weakening macro-economic environment 
- Registered Mobile Money subscribers across the Group of 27,4 million, up 23,2% QoQ across 14 operations
- Reported data revenue increased by 16,7% year-on-year (YoY), now contributing 20,8% to total revenue, organic data
  revenues increased 24,0% YoY.

YoY growth - refers to Quarter 1, 2015 vs Quarter 1, 2014 
QoQ growth - refers to Quarter 1, 2015 vs Quarter 4, 2014

MTN Group president and CEO, Sifiso Dabengwa comments:

“MTN’s results for the quarter were impacted by a weaker macro-economic environment following the reduction in the
price of oil in 2014 and continued price competition. MTN Nigeria is improved subscriber growth trends although 
revenue and minutes growth remains a challenge. While South African operation's subscriber growth was impacted by 
seasonality and some operational challenges, revenue growth was encouraging. 

"We continue to focus on our non-voice services which remain the key driver of the Group’s revenue growth. In the
quarter, we bolstered our management team to facilitate growth in these areas. We appointed a Group chief consumer 
officer and have made provision for the appointment of an executive for our digital business. Data revenue increased 
by 16,7% as we expanded our 3G and LTE networks and stimulated the adoption of data-enabled devices and smartphones." 


Operational review


This commentary includes an analysis of the quarterly performance of MTN South Africa, MTN Nigeria and the Group’s
large opco cluster. A detailed schedule of subscriber numbers and quarterly average revenue per user (ARPU) data for
all 22 operations is also included as an appendix. The reported ARPU is based on actual quarterly ARPU and is 
disclosed in both US dollars and local currency.

MTN South Africa recorded muted subscriber growth, ending the quarter with 28,0 million subscribers. The post-paid and
pre-paid subscriber base declined marginally recording 5,4 million and 22,6 million subscribers respectively. This was
impacted by seasonality, some short-term challenges in the distribution channel and lower handset sales. Despite this,
the operation remained competitive increasing total minutes by more than 100% YoY. Total minutes declined 6.1% QoQ,
impacted by seasonality.

Data revenue showed strong growth of 21,8% YoY and now contributes 27,7% to total revenue. This was supported by
attractive data promotions including data bundles and segmented e-journey communications. Data usage increased 62,6% 
YoY while data users increased 18,1% YoY to 17,2 million. MTN South Africa continues to focus on cost containment 
initiatives and optimising its operating model. Blended ARPU decreased by 4,8% to R87.

MTN Nigeria increased its subscriber base by 2,1% to 61,1 million and maintained subscriber market share during the
quarter. This was supported by competitive value propositions including promotions focused on family and friends, 
which stimulated on-net traffic. Total minutes on the network declined by 2,0% QoQ impacted largely by seasonality, 
and declined 2,4% YoY mainly due to increasing inflation and reduced consumer spend.    

Local currency data revenue continued to grow strongly increasing by 17,0% YoY and now contributes 19,7% to total
revenue. This was achieved despite the significant YoY decline in data tariffs and was driven by data subscriber 
growth of 17,6% YoY as well as strong growth in digital services. Diamond Yellow, our Mobile Money offering, has 
continued to gain traction with a key focus on stimulating subscriber activity, bank partnerships and expansion of 
the distribution footprint. 

While voice revenue growth remains challenging and is below expectations, the trend over the past six months is
positive with improvements in average daily revenues. Local currency ARPU declined by 1,4% as a result 
of lower voice revenue. 

Other operations: Large opco cluster
MTN Irancell delivered a sound performance despite strong competition, increasing its subscriber base by 1,1% to 
44,4 million in a highly penetrated market. Total minutes declined by 1,8% QoQ and 7,7% YoY, mainly impacted by the
substitution of voice with data services following the sharp decline in data tariffs in line with a data tariff cap 
introduced by the regulator in January 2015. Local currency data revenue increased by 101,5% YoY and now contributes 
24,5% to total revenue. 

The operation remains strongly focused on the expansion of 3G and 4G networks as well as providing attractive 
bundled data packages. At the end of the quarter MTN Irancell business had 2,959 3G sites on air and 993 LTE sites 
on air.

MTN Ghana continued to perform well despite a weak macro-economic environment. The operation grew its subscriber base
2,6% to 14,2 million, largely attributable to attractive “win a prize” promotions encouraging customers to talk, text
and browse. Total minutes increased 35,5% YoY while QoQ minutes declined 3,7%, largely impacted by seasonality. Local
currency data revenue increased by 38,9% YoY and now contributes 20,4% to total revenue. 

Mobile Money showed strong growth, recording 3,5 million registered subscribers at the end of the quarter and Mobile
Money revenues increased more than 250% YoY and now account for approximately 5% of total revenue. MTN Ghana continues 
to focus on cost optimisation, however, the weaker cedi against the US dollar has resulted in pressure on US dollar
denominated expenses. Local currency ARPU declined 2,2% for the quarter. 


MTN Cameroon increased its subscriber base by 4,5% to 10,1 million despite aggressive price competition. Total
minutes increased 15,5% YoY and 23,4% QoQ driven by competitive promotions such as Sunday campaigns, international 
bundles and reward offers. Local currency data revenue increased by 28,1% YoY. 

The operation launched 3G services in March 2015 and has rolled out 253 3G sites during the quarter and this is
expected to be a key driver of data revenues for the balance of the year. MTN Cameroon recorded 1,6 million Mobile 
Money subscribers, although the revenue contribution from financial services remains low. Local currency ARPU 
increased by 2,7% QoQ supported by relatively stable tariffs and higher minutes. 

MTN Ivory Coast delivered a satisfactory performance in a competitive market, increasing its subscriber base by 3,5%
to 8,3 million. Total minutes declined by 0,8% YoY largely due to the discontinuation of MTN call boxes.
Attractive usage offerings such as MTN Zone discounts and on-net bonuses upon recharge were introduced to stimulate 
usage on the network. The operation continued to advance its Mobile Money offering, recording 2,6 million Mobile Money 
subscribers at the end of the quarter.

Local currency data revenue increased by 56,1% YoY and now contributes 14,0% to total revenue. This was attributable
to attractive data bonus offers. Local currency ARPU declined by 6,0% mainly due to lower minutes, which 
impacted voice revenue.

MTN Uganda increased its subscriber base by 3,8% to 10,8 million. Revised MTN Zone and bonus offerings helped to
stimulate minutes on the network, which were up 17,6% YoY. Local currency data revenue increased by 18,3% YoY and now
contributes 26,1% to total revenue.  This was supported by improved data bundles and Mobile Money subscriber activity. 
Mobile Money continued to show solid growth, recording 7,9 million subscribers. Local currency ARPU decreased 9,9% as 
a result of a 10,6% decline in the  effective rate per minute (ERM) impacting voice revenue.  

MTN Sudan reported a net reduction of 355 000 subscribers largely as a result of a weak economy and security
challenges in key cities impacting gross subscriber additions. There was also a marked reduction in multi-simming 
impacting net connections. The operation continues to focus on churn management initiatives and the rollout of its 
Mobile Money distribution footprint. Local currency data revenue increased by 84,2% YoY, driven by attractive data 
bundles and now contributes 17,5% to total revenue. Local currency ARPU increased by 6,5%.  

MTN Syria continues to operate in extremely challenging conditions reporting a decline in its subscriber base by 
1,9% to 5,7 million. Security, power restrictions, staff retention and diesel availability remain some of the key 
challenges. Local currency data revenue continued to show positive growth and increased by 22,2% YoY, while local 
currency ARPU declined by 8,0%. 


Subscriber net addition guidance for FY2015

                December 2014    March 2015    
                         ‘000          ‘000          
 South Africa           2 400         2 400         
 Nigeria                4 750         4 750         
 Large opco             7 100         6 850         
 Iran                   1 750         1 750         
 Ghana                  1 100         1 100         
 Cameroon               1 500         1 500         
 Ivory Coast              800           800           
 Sudan                    750           500           
 Syria                      0             0             
 Uganda                 1 200         1 200         
 Small opco             3 250         3 500         
 Total                 17 500        17 500        
                                                


Subscribers 
(‘000)

  Country                 1Q14         2Q14         3Q14       4Q14         1Q15      QoQ %    
  South Africa          24 875       25 269       26 701      27 993      27 958       (0,1)    
  Postpaid               5 192        5 458        5 477       5 419       5 402       (0,3)    
  Prepaid               19 683       19 811       21 224      22 574      22 555       (0,1)    
  Nigeria               57 224       58 446       58 363      59 893      61 149        2,1      
  Large opco cluster    95 540       98 519      100 358     100 675     102 156        1,5      
  Iran                  41 783       42 697       43 533      43 940      44 421        1,1      
  Ghana                 13 055       13 439       13 547      13 852      14 208        2,6      
  Syria                  5 723        5 653        5 676       5 861       5 747       (1,9)    
  Ivory Coast            7 521        7 742        7 723       8 016       8 295        3,5      
  Cameroon               9 236       10 233       11 223       9 658      10 097        4,5      
  Uganda                 9 549        9 920       10 181      10 396      10 791        3,8      
  Sudan                  8 672        8 836        8 474       8 951       8 595       (4,0)    
  Small opco cluster    32 426       32 726       33 770      34 835      36 240        4,0      
  Yemen                  5 185        5 268        5 300       5 355       5 595        4,5      
  Afghanistan            6 058        6 182        6 339       6 435       6 390       (0,7)    
  Benin                  3 259        3 337        3 455       3 533       3 782        7,0      
  Congo B                1 865        1 911        1 972       2 012       2 038        1,3      
  Zambia                 4 161        4 010        4 447       4 932       5 386        9,2      
  Conakry                2 885        2 929        2 890       3 035       3 272        7,8      
  Rwanda                 3 525        3 621        3 743       3 820       3 889        1,8      
  Cyprus                   399          336          339         337         331       (2,0)    
  Liberia                1 355        1 308        1 299       1 294       1 319        1,9      
  Botswana               1 700        1 702        1 696       1 758       1 783        1,4   
  Bissau                   490          550          575         596         636        6,7      
  Swaziland                813          868          928         889         915        2,9   
  South Sudan              732          704          787         839         904        7,8   
  Total subscribers    210 065      214 961      219 191     223 396     227 503        1,8   



ARPU (Local currency)

                          1Q14            2Q14            3Q14           4Q14           1Q15      QoQ %     
  South Africa           95,21           93,58           89,26          91,55          87,16       (4,8)  
  Postpaid              189,30          166,37          159,76         170,00         159,52       (6,2)  
  Prepaid                71,98           74,16           70,40          72,06          69,75       (3,2)  
  Nigeria             1 177,82        1 124,34        1 123,29       1 118,11       1 102,59       (1,4)  
  Large opco                                                                                             
  Iran              102 834,76      108 478,89      109 683,56     110 005,75     110 351,87        0,3   
  Ghana                  11,73           11,97           12,02          12,59          12,32       (2,2)  
  Syria                 718,37          797,17          778,42         767,15         706,14       (8,0)  
  Ivory Coast         3 095,89        2 883,62        2 830,00       3 133,92       2 946,57       (6,0)  
  Cameroon            2 469,15        2 193,14        2 274,49       2 166,95       2 225,90        2,7   
  Uganda              8 974,72        8 688,11        8 801,30       8 687,07       7 998,46       (7,9)  
  Sudan                  12,36           13,21           13,07          13,88          14,77        6,5   
  Small opco                                                                                             
  Yemen               1 182,54        1 171,57        1 159,58       1 087,12         970,24      (10,8)  
  Afghanistan           180,62          195,43          190,33         179,85         159,27      (11,4)  
  Benin               3 764,70        3 613,43        3 689,51       3 796,19       3 512,75       (7,5)  
  Congo B             5 494,05        5 350,72        5 985,40       5 554,26       5 312,87       (4,3)  
  Zambia                 28,58           32,57           38,33          33,70          28,61      (15,1)  
  Conakry            29 163,91       22 552,64       18 718,42      20 334,09      19 190,61       (5,6)  
  Rwanda              1 655,75        1 684,02        1 763,68       1 545,17       1 538,99       (0,4)  
  Cyprus                 18,20           19,90           19,12          17,67          17,15       (3,0)  
  Liberia                 6,98            6,34            3,93           5,22           5,07       (2,9)  
  Botswana               65,00           66,00           72,00          73,56         61,04       (17,0)  
  Bissau              2 315,70        2 619,19        2 323,20       2 229,73       2 201,47       (1,3)  
  Swaziland             100,88          100,03           98,17          102,10         94,26       (7,7)  
  South Sudan            24,82           26,14           29,08          24,69          26,13        5,8   
                                                                                                         


ARPU (US dollar)

                     1Q14    2Q14       3Q14      4Q14      1Q15        QoQ %     
  South Africa       9,31    8,86       8,34      8,21      7,45         (9,2)  
  Nigeria            7,21    6,92       6,91      6,47      5,68        (12,3)  
  Large opco                                                                    
  Iran               4,13    4,26       4,18      4,11      4,01         (2,5)  
  Ghana              4,70    4,04       3,35      3,93      3,57         (9,1)  
  Syria              4,81    4,88       4,60      4,06      3,31        (18,5)  
  Ivory Coast        6,46    6,04       5,70      5,95      5,07        (14,7)  
  Cameroon           5,15    4,60       4,58      4,11      3,83         (6,8)  
  Uganda             3,58    3,45       3,36      3,19      2,79        (12,6)  
  Sudan              2,17    2,32       2,29      2,38      2,47          3,8   
  Small opco                                                                    
  Yemen              5,50    5,45       5,39      5,06      4,51        (10,8)  
  Afghanistan        3,16    3,39       3,34      3,12      2,76        (11,4)  
  Benin              7,86    7,57       7,43      7,20      6,05        (16,1)  
  Congo B           11,46    11,21      12,06     10,54     9,14        (13,2)  
  Zambia             4,97    5,05       6,26      5,35      4,23        (20,9)  
  Conakry            4,23    3,28       2,72      2,91      2,69         (7,7)  
  Rwanda             2,46    2,49       2,58      2,26      2,27          0,8   
  Cyprus            24,91    27,35      25,39     21,99     19,35       (12,0)  
  Liberia            6,98    6,34       3,93      5,22      5,07         (2,9)  
  Botswana           7,28    7,52       8,10      8,29     6,27         (24,4)  
  Bissau             4,83    5,49       4,68      4,23      3,79        (10,4)  
  Swaziland          9,35    9,47       9,12      9,15      8,06        (12,0)  
  South Sudan        7,85    8,27       9,20      7,81      8,26          5,8   
                                                                                


The financial information on which this quarterly update is based has not been reviewed or reported 
on by MTN’s external auditors.

Fairland
23 April 2015

Sponsor
Deutsche Securities (SA) Proprietary Limited
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