Wrap Text
Quarterly update for the period ended 31 March 2016
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 ending 31 March 2016
MTN is a leading emerging market mobile operator, connecting approximately 229 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.
Highlights
-Group subscribers decreased by 1,4% quarter-on-quarter (QoQ) impacted by the disconnections of subscribers in
Nigeria related to the substantial subscriber registration process and compliance exercise
-MTN South Africa subscribers decreased by 1,7% QoQ impacted by seasonality and the alignment of the subscriber base
recently acquired from Autopage
-MTN Nigeria subscribers decreased by 6,9% QoQ impacted by the disconnection of 4,5 million subscribers in February
2016 related to the registration compliance process
-Significant network improvement across the Group with the focused rollout of 3G and 4G sites with capital expenditure
year-to-date more than doubling YoY to R6 974 million
-Group revenue for the quarter was boosted by the significant YoY depreciation in the rand against a number of the
operational currencies
-Constant currency (organic) data revenue increased by 20,1% YoY, now contributing 24,2% to total revenue
-Voice and data traffic increased by 12,1% and 123,3% respectively YoY
YoY refers to: three months to March 2016 versus three months to March 2015.
QoQ refers to: Q1 2016 versus Q4 2015.
MTN Group executive chairman, Phuthuma Nhleko comments:
“During the first quarter of 2016, the Group was impacted by the ‘after shocks’ of the events that took place towards
the end of 2015, mainly the subscriber registration process in many of the countries in which we operate, with Nigeria
being the largest. In order to mitigate any future regulatory challenges, the Group took an exceptionally conservative
stance by disconnecting all subscribers who could possibly be deemed to be non-compliant. This has had a significant
unfavourable impact on total subscriber growth and revenue in Q1 16. Nonetheless, we believe this resolve to address
compliance matters decisively, has put the Group on a solid footing as regards the subscriber registration process and
regulatory matters in general. Further, the Group has undertaken a number of ‘back to the basics’ structural and
operational initiatives that will hopefully reset and position the Group for future growth in a rapidly evolving sector.
Subscriber growth was also impacted by the weak macro-environment, particularly in those markets reliant on oil exports.
The trading environment was highly competitive.
Data revenue remains a key priority. We delivered strong growth during the quarter. This was largely supported by
targeted campaigns, the aggressive roll out of 3G and LTE in key markets and increased smartphone uptake.
MTN South Africa’s performance was encouraging despite a marginal decline in subscriber growth, impacted by seasonal
trends and an alignment of the subscriber base, particularly the recently acquired subscriber base from Autopage.
Improved data performance in South Africa was supported by significant investment in the network. MTN Nigeria’s
performance was impacted by the subscriber registration process and regulatory restrictions during the quarter. The
operation, however, continues to invest heavily in the network to improve quality and support data growth.”
The analysis below is presented on a regional basis in line with the Group’s new operational structure. This comprises
South and East Africa (SEA), West and Central Africa (WECA) and Middle East and North Africa (MENA). Commentary is
mainly provided for South Africa, Nigeria and Iran, which are the largest contributors to the Group’s performance. It
also highlights key aspects from other operations that impacted performance.
The SEA region includes: South Africa, Uganda, Zambia, Rwanda, Botswana (joint venture) and Swaziland (joint venture).
The WECA region includes: Nigeria, Ghana, Cameroon, Ivory Coast, Benin, Congo-Brazzaville, Liberia, Guinea-Conakry and
Guinea-Bissau. The MENA region includes: Iran (joint venture), Syria, Sudan, Yemen, Afghanistan, Cyprus and South Sudan.
SEA
MTN South Africa reported a marginal decline in subscribers of 1,7% QoQ to 30,1 million. The prepaid subscriber base
declined by 1,8% QoQ to 24,9 million, largely impacted by seasonal trends following strong promotions in Q4 15. The
postpaid base decline of 0,8% to 5,2 million was impacted by the alignment of the Autopage subscriber base to MTN’s,
the disconnection of telemetry SIMs and the expiration of legacy low-cost packages. In addition to seasonality, quarterly
average revenue per user (ARPU) was impacted by the exceptionally unfortunate 48-hour network outage experienced in
February 2016. This had a negative impact of approximately 3% on revenue for the month while billable minutes for the
quarter declined by 11,3% YoY. In March we saw an encouraging 10,3% month-on-month (MoM) increase in revenue.
Data revenue continued to show strong growth increasing by 22,9% YoY and contributed 32,8% to total revenue. This was
supported by a 12% QoQ increase in the value of data bundles sold as well as an increase in smartphones to 9,2 million.
Improved 3G and LTE coverage supported a 29% increase in ARPU for those customers who moved from 2G to 3G and an
increase of 19% for those customers who moved from 3G to LTE. Data usage increased by 58,5% YoY. ARPU declined by 9,2%
QoQ.
Other SEA - across the rest of the region subscribers increased by 2,0% to 22,7 million in Q1 16. This was mainly
driven by strong growth
in Uganda.
MTN Uganda increased its subscriber base by 7,8% QoQ to 9,6 million supported by MTN Zone and attractive bundled
offers. In Uganda constant currency data revenue increased by 23,8% YoY and contributed 32,1% to total revenue. This
was supported by the roll out of 62 3G and 35 LTE sites during the quarter. Local currency ARPU increased by 15,0%
QoQ.
MTN Mobile Money subscribers declined by 27% to 6,9 million primarily due to the disconnections in Q4 15 related to
the subscriber registration process.
WECA
MTN Nigeria reported a 6,9% QoQ decrease in its subscriber base to 57,0 million. This was a result of the
disconnection of 4,5 million subscribers at the end of February 2016 related to the ongoing subscriber registration
process. We believe we have now dealt with all the subscribers who were considered to be non-compliant. The operation
continues to focus on reconnecting subscribers through proactive engagement and winback offers. Following the
re-instatement of regulatory services in March 2016, MTN Nigeria continued to engage the regulatory authorities and
we hope to receive approval from the regulator for approval of promotional products and services during the current
month.
Constant currency data revenue declined by 9,6% and contributed 19,0% to total revenue mainly due to a change in
regulatory requirements obliging operators to seek permission from customers to charge out-of-bundle rates upon the
depletion of a data bundle. During the quarter the operation continued to improve its data network in key cities and
rolled out 73 2G and 149 3G sites. These network coverage and quality improvements were reflected in the net promoter
score with an increase of 3% for the quarter. Local currency ARPU increased by 11,9% QoQ. The operation’s
competitiveness was impacted by regulatory restrictions in the quarter.
Other WECA - the remainder of the region increased its subscriber base by 1,3% to 45,9 million driven by solid growth
in MTN Ghana and MTN Cameroon.
MTN Ghana delivered a sound performance and grew its subscriber base by 4,6% to 17,0 million. This was supported by
competitive value propositions as well as churn and loyalty management initiatives. Billable minutes increased by 26,0%
YoY, while constant currency data revenue increased by 111,0% and contributed 36,3% to total revenue. This was supported
by strong growth in digital and mobile financial services as well as improved data network quality. The operation added
65 3G and 143 LTE sites in the quarter. Local currency ARPU increased by 4,0% QoQ. MTN Mobile Money customers increased
by 10,8% QoQ to 6,3 million.
MTN Cameroon increased its subscriber base by 3,1% to 9,5 million supported by improved 3G network quality and the
launch of 4G at the end of Q4 15. Constant currency data revenue increased by 78,9% and contributed 18,5% to total
revenue supported by a 7,5% increase in MTN Mobile Money subscribers to 2,1 million.
MENA
MTN Irancell increased its subscriber base by 1,0% QoQ to 46,6 million in a highly penetrated market. Constant
currency data revenue increased by 70,9% QoQ and contributed 39,3% to total revenue. This was largely supported by
continued network modernisation as well as the rollout of 1 368 3G and 743 LTE sites during the quarter. Local currency
ARPU decreased by 1,4% QoQ.
Other MENA - the remainder of the region increased its subscriber base by 0,2% to 27,0 million.
MTN Sudan increased its subscriber base by 4,0% to 8,8 million driven by competitive pricing and below-the-line and
targeted campaigns. Total billable minutes increased by 12,5% YoY. Constant currency data revenue increased by 74,0%
driven by digital content and contributed 26,2% to total revenue. Local currency ARPU increased by 8,4% QoQ.
MTN Syria, MTN Yemen and MTN Afghanistan remain profitable, however, they continue to operate in highly challenging
environments impacting the region’s subscriber growth.
Subscriber net additions guidance for 2016
December 2015 March 2016
'000 '000
SEA 3 820 3 515
South Africa 1 100 1 100
Uganda 2 000 1 800
Other 720 615
WECA 7 300 6 825
Nigeria 4 000 3 500
Ghana 800 1 100
Cameroon 1 000 1 000
Ivory Coast 75 400
Other 1 425 825
MENA 1 380 1 610
Iran 1 100 1 100
Sudan 125 350
Syria 50 0
Other 105 160
Total 12 500 11 950
The financial information on which this quarterly update is based has not been reviewed and reported on by
MTN’s external auditors.
Subscribers
(‘000)
Country 1Q15 2Q15 3Q15 4Q15 1Q16 QoQ%
SEA 51 625 52 168 53 439 52 853 52 796 (0,1)
South Africa 27 958 28 504 29 077 30 588 30 077 (1,7)
Postpaid 5 402 5 328 5 190 5 242 5 198 (0,8)
Prepaid 22 555 23 176 23 888 25 346 24 879 (1,8)
Uganda 10 791 11 146 11 524 8 929 9 624 7,8
Rwanda 3 889 3 958 4 010 4 119 4 015 (2,5)
Zambia 5 386 4 901 5 026 5 264 5 197 (1,3)
South Sudan 904 982 1 084 1 200 1 126 (6,2)
Botswana (joint venture) 1 783 1 784 1 794 1 758 1 826 3,9
Swaziland (joint venture) 915 892 923 995 931 (6,4)
WECA 104 798 108 802 107 952 106 576 102 942 (3,4)
Nigeria 61 149 62 813 62 494 61 252 57 045 (6,9)
Ghana 14 208 14 886 15 493 16 255 17 004 4,6
Cameroon 10 097 10 363 9 949 9 178 9 467 3,1
Ivory Coast 8 295 8 488 8 461 8 346 8 140 (2,5)
Benin 3 782 3 913 3 989 4 012 3 923 (2,2)
Conakry 3 272 3 485 3 362 3 244 3 075 (5,2)
Congo B 2 038 2 128 2 216 2 250 2 175 (3,3)
Liberia 1 319 1 300 1 300 1 357 1 409 3,9
Bissau 636 705 689 682 704 3,3
MENA 71 080 70 747 71 663 73 071 73 601 0,7
Iran (joint venture) 44 421 44 146 45 464 46 142 46 621 1,0
Syria 5 747 5 765 5 769 5 972 5 792 (3,0)
Sudan 8 595 8 757 8 315 8 462 8 800 4,0
Yemen 5 595 5 239 5 255 5 351 5 335 (0,3)
Afghanistan 6 390 6 487 6 503 6 785 6 702 (1,2)
Cyprus 331 354 356 359 351 (2,4)
Total subscribers 227 503 230 997 233 054 232 500 229 339 (1,4)
ARPU
(Local currency)
Country 1Q15 2Q15 3Q15 4Q15 1Q16 QoQ%
SEA
South Africa 87,16 88,44 93,65 91,54 83,10 (9,2)
Postpaid 159,52 163,86 180,65 163,84 154,70 (5,6)
Prepaid 69,75 70,40 74,04 76,00 68,30 (10,1)
Uganda 7 998,46 7 148,75 7 512,37 7 358,68 8 462,00 15,0
Rwanda 1 538,99 1 562,92 1 565,57 1 444,71 1 487,72 3,0
Zambia 28,61 28,34 32,00 30,17 27,47 (8,9)
South Sudan 26,13 26,33 24,52 27,53 55,11 100,2
Botswana (joint venture) 61,04 63,21 68,24 64,00 61,00 (4,7)
Swaziland (joint venture) 94,26 93,73 103,30 101,31 88,00 (13,1)
WECA
Nigeria 1 102,59 1 046,45 994,44 963,42 1 078,00 11,9
Ghana 12,32 12,53 12,52 11,70 12,17 4,0
Cameroon 2 225,90 2 043,26 2 169,43 2 140,00 2 053,47 (4,0)
Ivory Coast 2 946,57 2 797,32 2 708,13 2 780,00 2 771,75 (0,3)
Benin 3 512,75 3 438,86 3 594,24 3 523,30 3 616,00 2,6
Conakry 19 190,61 17 043,90 14 874,41 16 508,47 14 791,78 (10,4)
Congo B 5 312,87 5 365,33 5 597,42 5 334,97 4 926,03 (7,7)
Liberia 5,07 4,70 3,96 4,31 3,73 (13,5)
Bissau 2 201,47 2 473,65 2 111,39 1 910,73 1 978,20 3,5
MENA
Iran (joint venture) 110 351,87 114 958,63 116 024,94 113 683,00 112 061,00 (1,4)
Syria 706,14 795,23 863,86 770,64 767,07 (0,5)
Sudan 14,77 15,46 15,89 15,90 17,23 8,4
Yemen 970,24 786,84 920,73 909,66 880,20 (3,2)
Afghanistan 159,27 170,64 180,09 170,51 131,93 (22,6)
Cyprus 17,15 17,57 17,81 17,27 16,26 (5,8)
ARPU
(US dollar)
Country 1Q15 2Q15 3Q15 4Q15 1Q16 QoQ%
SEA
South Africa 7,45 7,46 7,22 6,40 5,32 (16,9)
Uganda 2,79 2,34 2,13 2,29 2,49 8,7
Rwanda 2,27 2,25 2,21 1,95 2,01 3,1
Zambia 4,23 3,83 3,65 2,84 2,45 (13,7)
South Sudan 8,26 8,33 7,75 4,71 2,06 (56,3)
Botswana (joint venture) 6,27 6,35 6,28 5,60 5,45 (2,7)
Swaziland (joint venture) 8,06 7,81 7,97 7,08 5,60 (20,9)
WECA
Nigeria 5,68 5,25 4,99 4,87 5,40 10,9
Ghana 3,57 3,15 3,29 3,09 3,13 1,3
Cameroon 3,83 3,43 3,68 3,60 3,37 (6,5)
Ivory Coast 5,07 4,70 4,59 4,69 4,55 (3,0)
Benin 6,05 5,78 6,09 5,80 5,94 2,4
Conakry 2,69 2,34 2,01 2,15 1,70 (20,9)
Congo B 9,14 9,02 9,48 9,00 8,22 (8,7)
Liberia 5,07 4,70 3,96 4,31 3,73 (13,5)
Bissau 3,79 4,16 3,58 3,15 3,24 2,9
MENA
Iran (joint venture) 4,01 4,03 3,91 3,61 3,71 2,8
Syria 3,31 3,04 2,95 3,91 2,09 (46,5)
Sudan 2,47 2,59 2,62 2,61 2,83 8,4
Yemen 4,51 3,66 4,06 4,10 4,10 -
Afghanistan 2,76 2,89 2,86 2,59 1,92 (25,9)
Cyprus 19,35 19,37 19,80 18,38 17,78 (3,2)
Fairland
21 April 2016
Sponsor
Deutsche Securities (SA) Propriety Limited
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