Wrap Text
Quarterly update for the period ended 31 March 2017
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 2017
MTN is a leading emerging market mobile operator, serving approximately 237 million people in 22 countries across
Africa and the Middle East. Our vision is to deliver a bold, new Digital World to our customers.
Highlights
- In March 2017, we completed the evolution of the core senior management team. The new Group president and
chief executive officer (CEO), chief financial officer and chief operating officer are now in place and
have settled in, swiftly adjusting to their respective roles while beginning a review of the business to
see where further improvements can be made;
- Group total revenue increased by 7,1% with data revenues up 29,4% year-on-year YoY). Data revenue contributed
20% to total revenue;
- MTN South Africa reported a solid performance with a 4,1% increase in service revenue;
- MTN Nigeria delivered continued positive operational momentum and reported an 11,6% increase in total revenue;
- MTN Irancell increased total revenue by 19,3% benefiting from encouraging data revenue trends;
- On balance across the majority of our Tier 2 operations we have seen encouraging revenue trends;
- Voice traffic (billable minutes) increased by 2% and total data traffic by 145%;
- Group subscribers decreased by 1,5% quarter-on-quarter (QoQ) largely as a result of restatements to subscriber
numbers in Ghana, Rwanda and Zambia; and
- Network improvement continued across the Group, particularly in the Nigerian, South African and Iranian operations
supported by year-to-date capital expenditure at R4 619 million.
All financial growth trends are reported on an organic basis
YoY - 1Q17 vs 1Q16
QoQ- 1Q17 vs 4Q16
Data revenue refers to access data only
Digital revenue refers to Mobile Money (MoMo) and value added services (VAS) revenue.
MTN Group president and CEO, Rob Shuter comments:
“In the first three months of the year we saw a continuation of the improving operational momentum experienced in the
fourth quarter of 2016. While we still have work to do to meet our full-year targets, we continue to leverage off the
progress made during 2016 and are encouraged by the progress in project IGNITE* in both South Africa and Nigeria.
The ongoing network investment in Nigeria is delivering continued improvements in data quality in the metro areas and
highlights MTN Group’s commitment to the Nigerian market notwithstanding the challenging macro environment.
In South Africa we are making progress on tackling our underperformance in the postpaid segment although it will take
time for this to reflect in our financial performance.
The Group continues to work towards achieving our vision to lead the delivery of a bold, new Digital World to our
customers. We will continue to leverage our scale and enhance our competitive position, benefiting from Africa’s low
data penetration and the unique opportunity we have to offer our customers a wide range of digital services across
our markets.
In our key markets of South Africa, Nigeria and Iran significant network investments made over the past few years are
underpinning the improving revenue trends. The network investment planned for 2017 is expected to support further market
share gains across our markets.
While our reported subscriber numbers are lower than we had expected, this is largely the result of an ongoing review
of subscriber definitions. We are planning to further modernise our internal subscriber definitions to more closely
align with the changing mix of revenue streams and will report on this at the end of the first half of 2017.”
*Project IGNITE is the group transformation initiative designed to optimise operations in South Africa and Nigeria
SEA region comprises South Africa, Uganda, Zambia, Rwanda, Botswana (joint venture), Swaziland (joint venture) and
South Sudan.
WECA region comprises Nigeria, Ghana, Cameroon, Ivory Coast, Benin, Congo Brazzaville, Liberia, Guinea Conakry and
Guinea Bissau.
MENA region comprises Iran (joint venture), Syria, Sudan, Yemen, Afghanistan and Cyprus.
SEA REGION
SOUTH AFRICA
MTN South Africa recorded a solid performance in the first quarter with service revenue up 4,1%. This was supported
by data and digital revenue which increased by 17,8% and 20,3% respectively, while outgoing voice revenue declined
5,4% YoY as billable minutes declined by 7,5%.
The priorities for the South Africa business remain driving network quality, offering attractive value propositions
and improving the customer experience. In the period we continued our network expansion with 515 LTE sites and
53 3G sites going live. We now have very strong network performance in three of the four large metro areas
(Cape Town, Pretoria and Durban) and expect this to support a continued improvement in our net promoter score (NPS).
While subscribers declined in the quarter as a result of traditional seasonality, we remain committed to our net
additions guidance of 630 000. We are encouraged by the progress made in our relationship with our franchise channel
and this, together with the ongoing systems and process improvements should drive continued improvement in the customer
experience.
UGANDA
Following a challenging 2016, MTN Uganda experienced a positive first quarter with encouraging revenue trends.
Mobile Money revenue increased 34,0% and now contributes 22% of total revenue. The introduction of personalised
voice bundles supported an 11,5% increase in on-net voice revenue.
MTN Uganda reported net additions for the quarter of 312 000. We expect subscriber growth to moderate as a result
of the change in subscriber registration regulations which now require national identity (ID) numbers to be linked
to individual subscribers. We have also commenced the process of retrospectively linking the historic subscriber
base to the national ID system.
SEA excluding South Africa - across the rest of the region the subscriber base remained flat. Uganda, Rwanda and
Swaziland contributed positively, however growth was offset by a decline in subscribers in Zambia, South Sudan
and Botswana.
WECA REGION
NIGERIA
MTN Nigeria had a strong start to the year with an 11,6% increase in total revenue supported by a 71,3% increase
in data revenue. Whilst the momentum is encouraging the ongoing review of value added services (VAS) subscribers,
will put pressure on digital revenue for the balance of the year.
MTN Nigeria’s subscriber base declined by 2,3% in the quarter. This was impacted by new regulations that require
all subscriber connections to take place in permanent brick and mortar structures. This led to a marked reduction
in gross connections across the industry. MTN Nigeria has also continued with the process of excluding subscribers
whose only activity is receiving incoming SMS.
Despite the challenging economic conditions MTN Nigeria continued to execute on its network rollout plans with
a particular focus on the data network. This remains a key element in the Group’s medium-term growth strategy.
GHANA
MTN Ghana continued to benefit from the improving macro environment with solid revenue growth benefiting from a
55,2% increase in data revenue. Mobile money was a stand-out performer and now accounts for 13% of MTN Ghana’s
total revenue.
MTN Ghana reported a decline in subscribers in the quarter of 2,5 million. This was impacted by the review of
subscriber definitions resulting in the disconnection of 3,4 million subscribers. After adjusting for these net
additions in the quarter were 893 000.
IVORY COAST
After a tough 2016 in which revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) margins
came under pressure, MTN Ivory Coast saw a marked improvement in the quarter, reporting 9,4% revenue growth.
Data revenue increased 84,1% while mobile money revenue increased by 32,5%. A significant improvement in NPS
supported the good progress made in gaining high value subscribers.
The regulator recently introduced rules disallowing differential pricing for on-net and off-net tariffs and
furthermore imposed a significant reduction in leased line prices. This is expected to impact our performance in
the rest of the year.
CAMEROON
MTN Cameroon experienced a particularly challenging period with the data network shutdown in select areas impacting
all operators in the country. Data revenue growth was constrained to 9,8% as the data network shutdown affected in
excess of 20% of our subscriber base. Encouragingly, the business was able to restore data services in these regions
effective 21 March 2017 which should result in some improvement for the rest of the year. Mobile money revenue in
Cameroon increased 390%.
MTN’s investment in the network over the past few years has delivered positively and MTN Cameroon is today the
leading operator in terms of network NPS.
WECA excluding Nigeria - across the rest of the region subscribers declined by 3,6% mainly as a result of the
disconnection of subscribers in Ghana. Ivory Coast, Benin and Guinea Bissau contributed positively to the region’s
subscriber base.
MENA REGION
IRAN
MTN Irancell saw continued strong revenue momentum in the period with data revenue increasing by 76,7% YoY.
NPS improved significantly with an improvement in network NPS a key driver.
Other MENA - across the rest of the region subscribers decreased by 1,4% driven by a decline in Syria, Yemen
and Afghanistan. Sudan and Cyprus contributed positively to the region’s subscriber base.
The financial information on which this quarterly update is based has not been reviewed and reported on by MTN’s
external auditors.
Constant currency (organic) information has been presented to illustrate the impact of changes in currency rates
on the Group’s results. In determining the change in constant currency terms, the current financial reporting year’s
results have been adjusted to the prior year’s average exchange rates determined as the average of the monthly
exchange rates. The measurement has been performed for each of the Group’s currencies, materially being that of
the US dollar and Nigerian naira. The organic growth percentage has been calculated based on the current year
constant currency results compared to the prior year results. In addition, in respect of MTN Irancell, MTN Sudan,
MTN South Sudan and MTN Syria, the constant currency information has been prepared excluding the impact of
hyperinflation. In 2015, the Iranian economy was assessed to no longer be a hyperinflationary environment.
MTN therefore discontinued hyperinflation accounting in that operation effective 1 July 2015. In addition,
during 2016, Sudan was no longer considered to be a hyperinflationary economy from 1 July 2016 and hyperinflation
accounting was discontinued from this date onwards.
Fairland
3 May 2017
Sponsor
Deutsche Securities (SA) Proprietary Limited
Subscribers including WiMax
(‘000)
Country 1Q16 2Q16 3Q16 4Q16 1Q17 QoQ %
SEA 52 796 52 872 52 975 54 738 54 279 (0,8)
South Africa 30 077 29 805 29 668 30 764 30 231 (1,7)
Postpaid 5 198 5 132 5 166 5 185 5 161 (0,5)
Prepaid 24 879 24 673 24 502 25 579 25 070 (2,0)
Uganda 9 624 9 891 10 180 10 549 10 861 3,0
Rwanda 4 015 3 989 4 094 4 062 4 210 3,6
Zambia 5 197 5 417 5 392 5 802 5 505 (5,1)
South Sudan 1 126 1 055 892 771 708 (8,2)
Botswana 1 826 1 798 1 805 1 821 1 784 (2,1)
Swaziland 931 919 945 970 981 1,2
WECA 102 952 105 560 108 110 111 901 108 665 (2,9)
Nigeria 57 045 58 978 60 462 61 970 60 523 (2,3)
Ghana# 17 004 17 579 18 050 19 296 16 789 (13,0)
Cameroon 9 477 9 648 9 521 9 870 9 749 (1,2)
Ivory Coast 8 140 8 236 8 542 9 484 10 399 9,7
Benin 3 923 3 962 3 988 4 053 4 162 2,7
Conakry 3 075 2 748 2 941 2 563 2 493 (2,7)
Congo B 2 175 2 270 2 333 2 404 2 355 (2,0)
Liberia 1 409 1 443 1 574 1 577 1 495 (5,2)
Bissau 704 696 699 685 700 2,1
MENA 73 855 74 145 73 613 73 738 73 868 0,2
Iran 46 852 47 316 47 837 47 625 48 118 1,0
Syria 5 802 5 837 5 899 6 067 5 915 (2,5)
Sudan 8 800 8 814 7 668 7 490 7 604 1,5
Yemen 5 335 5 310 5 322 5 252 5 221 (0,6)
Afghanistan 6 702 6 482 6 480 6 895 6 597 (4,3)
Cyprus 363 386 407 409 414 1,2
Total subscribers 229 603 232 577 234 698 240 378 236 813 (1,5)
# 1Q2017 restated
ARPU
(Local currency)
Country 1Q16 2Q16 3Q16 4Q16 1Q17 YoY %
SEA
South Africa 83,10 81,95 90,47 92,54 90,88 9,4
Postpaid 154,70 152,98 178,33 164,59 149,58 (3,3)
Postpaid (excluding telemetry) 258,77 280,59 317,17 295,45 276,36 6,8
Prepaid 68,30 67,15 72,00 77,54 70,83 3,7
Uganda 8 462,00 7 528,18 7 526,96 8 114,82 7 635,00 (9,8)
Rwanda 1 487,72 1 486,82 1 544,73 1 507,62 1 413,31 (5,0)
Zambia 27,47 26,89 28,09 25,38 21,80 (20,6)
South Sudan 55,11 55,05 70,22 145,63 198,44 260,1
Botswana 61,00 63,00 67,00 71,31 64,65 6,0
Swaziland 88,00 91,00 105,54 106,95 102,69 16,7
WECA
Nigeria 1 078,00 1 086,00 1 047,63 1 100,02 1 131,00 4,9
Ghana 12,17 12,28 12,73 13,66 12,90 6,0
Cameroon 2 052,45 1 952,75 1 981,00 2 046,88 1 844,00 (10,2)
Ivory Coast 2 771,75 2 705,14 2 802,82 2 738,18 2 683,85 (3,2)
Benin 3 616,00 3 506,59 3 458,95 3 595,94 3 283,25 (9,2)
Conakry 14 791,78 16 409,98 18 657,08 18 393,40 19 926,34 34,7
Congo B 4 926,03 5 054,11 4 714,69 4 455,24 4 031,72 (18,2)
Liberia 3,73 3,51 3,34 3,45 2,44 (34,7)
Bissau 1 978,20 2 403,63 2 321,77 2 136,85 2 157,54 9,1
MENA
Iran 112 513,01 121 147,23 126 364,00 125 604,00 128 907,00 14,6
Syria 767,08 865,87 1 083,20 1 045,44 1 013,91 32,2
Sudan 17,23 17,69 19,05 22,04 24,00 39,3
Yemen 880,20 904,79 921,50 810,82 793,79 (9,8)
Afghanistan 131,93 126,34 135,98 128,59 102,76 (22,1)
Cyprus 16,93 17,15 17,41 16,20 16,08 (5,0)
ARPU
(US dollar)
Country 1Q16 2Q16 3Q16 4Q16 1Q17 YoY %
SEA
South Africa 5,32 5,51 6,35 6,72 6,86 28,9
Uganda 2,49 2,25 2,23 2,30 2,11 (15,1)
Rwanda 2,01 1,93 1,95 1,87 1,74 (13,4)
Zambia 2,45 2,63 2,82 2,60 2,27 (7,5)
South Sudan 2,06 1,50 1,24 1,95 1,84 (10,7)
Botswana 5,45 5,67 6,33 6,74 6,17 13,2
Swaziland 5,60 6,11 7,41 7,77 7,75 38,3
WECA
Nigeria 5,40 5,09 3,38 3,52 3,60 (33,3)
Ghana 3,13 3,19 3,23 3,27 2,87 (8,2)
Cameroon 3,37 3,29 3,36 3,38 2,98 (11,6)
Ivory Coast 4,55 4,63 4,76 4,51 4,33 (4,8)
Benin 5,94 5,95 5,87 5,92 5,30 (10,8)
Conakry 1,70 1,83 2,06 2,02 2,16 26,8
Congo B 8,22 8,66 8,01 7,35 6,51 (20,8)
Liberia 3,73 3,51 3,34 3,45 2,44 (34,7)
Bissau 3,24 4,11 3,94 3,52 3,48 7,4
MENA
Iran 3,73 3,99 4,02 3,94 3,86 3,5
Syria 1,53 1,80 2,16 2,02 1,96 28,1
Sudan 2,83 2,90 3,12 3,41 3,59 27,0
Yemen 4,10 3,71 3,69 3,24 3,17 (22,7)
Afghanistan 1,92 1,84 2,01 1,92 1,52 (21,0)
Cyprus 18,51 19,33 19,68 17,53 17,10 (7,6)
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