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MTN GROUP LIMITED - Quarterly update for the period ended 31 March 2016

Release Date: 21/04/2016 07:32
Code(s): MTN     PDF:  
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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