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MTN GROUP LIMITED - Quarterly update for the period ended 30 September 2017

Release Date: 24/10/2017 07:05
Code(s): MTN     PDF:  
Wrap Text
Quarterly update for the period ended 30 September 2017

(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 30 September 2017


MTN is a leading emerging markets mobile operator, connecting approximately 230 million people in 22
countries across Africa and the Middle East. We are at the forefront of global technological changes, 
delivering a bold, new Digital World to our customers.


Salient features
- Group subscribers declined marginally by 0,7% quarter-on-quarter (QoQ) to 230,2 million, largely 
  driven by lower reported subscribers in Nigeria as we continue to refine our active subscriber 
  definitions as well as the disconnection of approximately 750 000 subscribers in Uganda as a result 
  of regulatory SIM registration requirements.
- Active MTN Mobile Money customers increased QoQ by 10,6% to 19,8 million.
- Voice traffic (billable minutes) increased by 9% and data traffic continued to grow strongly up by 
  some 125% year-on-year (YoY).
- On a reported basis Group total revenue and Group service revenue reduced by 13,4% and 14,0% 
  respectively largely due to exchange rate movements.
- On a constant currency basis Group total revenue increased by 6,9%, with Group service revenue up 7,4%. 
  Data revenue increased by 31,4% and digital revenue was up 19,6%.
- MTN South Africa's organic service revenue increased by 5,2%*.
- MTN Nigeria reported an 11,2% increase in total revenue supported by data revenue growth of 72,1%.
- MTN Irancell total revenue increased by 16,8% and;
- MTN Group year-to-date capital expenditure was R18 billion, up 1,1%. 

Unless otherwise stated financial growth rates are presented on a constant currency basis. Financial 
growth rates are year-on-year (the nine-month period ended 30 September 2017 versus the nine months ended 
30 September 2016) unless otherwise stated. QoQ growth rates refer to 3Q17 vs 2Q17. Data revenue refers to 
access data revenue only. Digital revenue refers to Mobile Money (MoMo) and value-added services (VAS) 
revenue.
*Organic revenue adjusts for prior year disposals and alignment of post-paid carry over rules.


MTN Group president and chief executive officer, Rob Shuter comments:
"The Group continued to make steady progress in implementing our BRIGHT strategy with a strong focus on
operational execution across the Group. Our key growth drivers of data and digital services performed well 
with revenue growth of 31,4% and 19,6% respectively. In the quarter, we have accelerated our network 
investment programme, rolling out 1 641 3G and 2 102 4G sites (including co-located sites), supporting the 
demand for data services. In South Africa and Nigeria the network investments are showing encouraging 
improvements in network quality and NPS.

In South Africa the prepaid business performed well and progress is being made in the postpaid segment
particularly in consumer  postpaid where we now have positive net-adds year to date. In Nigeria, our 
month-on-month gross connections have increased, and we experienced stable subscriber market share over the 
quarter while driving increased value share.

In line with our strategic initiative to drive a dual-data strategy, we are working on reducing the
out-of-bundle data pricing across our markets to stimulate usage from inactive and low usage customers. This 
is expected to have a short-term impact on data revenue growth but we anticipate elasticity in the mass 
and high-value segments will continue to drive data revenue growth in the medium term.

We further strengthened our management structure to support our BRIGHT strategy. The appointment of 
Ebenezer Asante as vice-president (VP) of our new South and East Africa and Ghana Region, effective 
1 October 2017 completes the Group executive structure. Ebenezer was previously the chief executive officer 
of MTN Ghana, a position he held from July 2015 to September 2017.

Other Group senior appointments in the quarter included:
* Fred Scheppens as Group executive: MTN GlobalConnect, effective 15 October 2017;
* Dirk Karl as Group executive: Procurement and Supply Chain Management, effective 1 October 2017;
* Serigne Dioum as Group executive: Mobile Financial Services, effective 26 September 2017; and
* Ankur Bajpai as Group executive: Customer Value Management, effective 1 September 2017.

We continue to work on the modernisation of our subscriber definitions which we expect to complete by
year-end.

We remain on track to meet our financial year 2017 guidance despite continued challenging economic growth
across our markets."

MTN GlobalConnect is MTN's wholesale business.

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 was made up of Iran (joint venture), Syria, Sudan, Yemen, Afghanistan and Cyprus. 


SEA REGION

SOUTH AFRICA
MTN South Africa recorded organic service revenue growth of 5,2%*. Data and digital services revenue which 
increased by 21,0% and 27,7% respectively, were supported by a strong prepaid performance as well as the 
continued recovery of the postpaid consumer segment. NPS continued to improve driven mainly by network NPS.

Subscriber numbers decreased by 1,0% to 30,9 million, impacted by a 1,3% decline in the prepaid segment
(mainly the result of higher churn following the withdrawal of a Q2 2017 promotion). Postpaid subscriber 
numbers were stable.

The postpaid consumer segment recorded positive net additions in quarter, demonstrating a continued
encouraging recovery in this segment. This was supported by improvements made in customer value management 
(CVM), increased channel footprint and enhanced churn management. The growth in consumer net additions was 
partly offset by the disconnection of subscribers through certain on-biller partnerships and churn in the 
enterprise segment. 

MTN South Africa continued to make good progress in improving the quality and capacity of its 3G and 4G
network in the quarter with leading network metrics in three of the four metros in the country.

UGANDA
MTN Uganda delivered encouraging revenue trends, underpinned by strong growth in data and MoMo revenue. Data
revenue increased by 29,8%, supported by improved 3G coverage, implementing new CVM including contextualised
pricing, and increased smartphone penetration. MoMo contributed 23% to total revenue. On-net voice revenue
continued to show positive growth following the launch of personalised voice bundles earlier in the year. 

The operation’s NPS improved further in the quarter, supported by stronger value and billing NPS (QoQ).

At the end of August 2017, MTN Uganda disconnected approximately 750 000 subscribers as a result of
regulatory SIM registration requirements. As a result, the subscriber base declined by 3,2% to 10,8 million.

SEA EXCLUDING SOUTH AFRICA - across the rest of the SEA region the subscriber base declined by 0,7% QoQ.
Rwanda, Zambia, Swaziland and South Sudan contributed positively, however the growth was offset by the
disconnections in Uganda.

WECA REGION

NIGERIA
MTN Nigeria continued to deliver healthy revenue growth of 11,2%, supported by 5,4% growth in voice revenue
and 72,1% growth in data revenue. Voice revenue growth was driven by effective price optimisation, increased
minutes of use and higher interconnect revenue. Data revenue benefited from investments made on expanding 
and improving the 3G and 4G network quality, and increased 4G device penetration. Digital revenue growth, 
however, continued to be negatively impacted by the ongoing optimisation of VAS services. NPS showed 
incremental improvements, driven by network NPS (QoQ).

MTN Nigeria decreased its subscriber base by 5,2% to 50,3 million impacted by the modernisation of
subscriber definitions. On a like-for-like basis MTN Nigeria reported positive net additions and continued 
to gain value share in the quarter. To further drive subscriber growth increasing the SIM registration 
footprint remains a priority.

MTN Nigeria made good progress in the quarter in executing on network investment, improving network quality
and capacity in key cities.

GHANA
MTN Ghana delivered strong growth of 51,1% and 39,7% respectively in data and digital revenue. This was
supported by an increase in the number of data users following the introduction of new data bundles. MoMo
continued to make sound progress and contributed 13% to total revenue. 

MTN Ghana increased its subscriber base by 1,6% to 17,6 million. The operation showed some improvements in
overall NPS, supported by an increase in network NPS (QoQ).

IVORY COAST
MTN Ivory Coast recorded good growth in revenue, led by an acceleration of both data and MoMo revenue. Data
revenue increased by 70,1%, benefiting from the expansion of the operation’s 3G network. Digital revenue
continued to gain traction and increased by 33,5%.

MTN Ivory Coast increased its subscriber base by 5,5% to 11,6 million in the quarter, underpinned by the
introduction of attractive data value propositions. NPS, however, was negatively impacted by higher on-net 
voice pricing as a result of regulatory requirements disallowing differential pricing for on-net and 
off-net tariffs. This adversely affected value NPS in the quarter (QoQ).

CAMEROON
MTN Cameroon continued to operate in a challenging economic environment which negatively impacted on
consumer spending. Despite this, data and digital revenue increased by 18,2% and 13,2% respectively. Data 
revenue was supported by strong growth in data users and smartphone penetration while digital revenue was 
underpinned by significant growth in MoMo revenue in the quarter.

The operation’s subscriber base declined by 1,0% in the quarter due to lower gross connections as a result
of continued implementation of the subscriber registration rules. MTN Cameroon recorded continued 
improvements in NPS in the quarter, supported by network NPS (QoQ).

MTN Cameroon, together with other industry operators, received a sanction from the Republic of Cameroon
Telecommunications Regulatory Board for allegedly not complying with spectrum and subscriber registration
regulations. The penalty was equivalent to approximately US$6,6 million and a one-year reduction in its 
licence term (which extends to 2030). MTN is engaging with the regulator and the highest authorities of 
Cameroon on this matter.

WECA EXCLUDING NIGERIA - across the rest of the region, subscribers increased by 2,6% in the quarter. Ghana,
Ivory Coast, Guinea-Conakry, Congo-Brazzaville, Guinea-Bissau and Liberia contributed positively to the
region’s subscriber base. This was partly offset by a decline in subscriber growth in Cameroon and a 
relatively flat performance in Benin.

MENA REGION

IRAN
MTN Irancell delivered robust revenue growth in the period. This was supported by 64,5% growth in data
revenue. The operation’s subscriber base expanded by 1,0% in the quarter. Improving NPS in MTN Irancell 
remains a priority.

OTHER MENA - across the rest of the region, subscribers decreased by 0,4% in the quarter, led down by
declines 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 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 constant currency 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 Sudan, MTN South Sudan and MTN Syria, the constant currency information has been 
prepared excluding the impact of hyperinflation.

Fairland 
24 October 2017

Sponsor
Deutsche Securities (SA) Proprietary Limited 

Quarterly update for the period ended 30 September 2017
Subscribers
(‘000)

   Country                             1Q16           2Q16           3Q16           4Q16           1Q17           2Q17           3Q17        QoQ %    
   SEA                               52 796         52 872         52 975         54 738         54 279         54 893         54 420         (0,9)   
   South Africa                      30 077         29 805         29 668         30 764         30 231         31 216         30 908         (1,0)   
    Postpaid                          5 198          5 132          5 166          5 185          5 161          5 194          5 227          0,6    
    Prepaid                          24 879         24 673         24 502         25 579         25 070         26 022         25 681         (1,3)   
   Uganda                             9 624          9 891         10 180         10 549         10 861         11 158         10 806         (3,2)   
   Rwanda                             4 015          3 989          4 094          4 062          4 210          3 510          3 575          1,9    
   Zambia                             5 197          5 417          5 392          5 802          5 505          5 575          5 695          2,2    
   South Sudan                        1 126          1 055            892            771            708            685            691          0,9    
   Botswana (joint venture)           1 826          1 798          1 805          1 821          1 784          1 763          1 746         (0,9)   
   Swaziland (joint venture)            931            919            945            970            981            987            999          1,2    
   WECA                             102 952        105 560        108 110        111 902        108 665        102 328        100 851         (1,4)   
   Nigeria                           57 045         58 978         60 462         61 970         60 523         53 094        50 308#         (5,2)   
   Ghana                             17 004         17 579         18 050         19 296         16 789         17 304         17 590          1,6    
   Cameroon                           9 477          9 648          9 521          9 870          9 749          9 541          9 447         (1,0)   
   Ivory Coast                        8 140          8 236          8 542          9 484         10 399         11 018         11 619          5,5    
   Benin                              3 923          3 962          3 988          4 053          4 162          4 273          4 280          0,2    
   Conakry                            3 075          2 748          2 941          2 563          2 493          2 550          2 696          5,7    
   Congo B                            2 175          2 270          2 333          2 404          2 355          2 345          2 481          5,8    
   Liberia                            1 409          1 443          1 574          1 577          1 495          1 412          1 635         15,8    
   Bissau                               704            696            699            685            700            789            795          0,7    
   MENA                              73 855         74 145         73 613         73 738         73 868         74 547         74 957          0,5    
   Iran (joint venture)              46 852         47 316         47 837         47 625         48 118         49 041         49 539          1,0    
   Syria                              5 802          5 837          5 899          6 067          5 915          5 915          5 915            -    
   Sudan                              8 800          8 814          7 668          7 490          7 604          7 576          7 450         (1,7)   
   Yemen                              5 335          5 310          5 322          5 252          5 221          5 110          5 089         (0,4)   
   Afghanistan                        6 702          6 482          6 480          6 895          6 597          6 469          6 516          0,7    
   Cyprus                               363            386            407            409            414            436            447          2,5    
   Total subscribers                229 603        232 577        234 698        240 378        236 813        231 768        230 228         (0,7)   
   #  New definition.


ARPU
(Local currency)

   Country                       1Q16            2Q16            3Q16            4Q16            1Q17            2Q17           3Q17      QoQ %    
   SEA                                                                                                                                             
   South Africa                82,59*          81,42*          89,95*          92,11*          84,79*           85,24          88,12        3,4    
   Postpaid                   152,19*         149,73*         175,23*         162,14*         147,05*          148,97         149,70        0,5    
   Postpaid (excluding 
   telemetry)                 265,57*         263,97*         312,01*         290,88*         264,52*          268,57         272,40        1,4    
   Prepaid                     68,30*          67,15*          72,00*          77,54*          72,06*           72,32          75,87        4,9    
   Uganda                    8 462,00        7 528,18        7 526,96        8 114,82        7 635,00        7 399,00       7 699,00        4,1    
   Rwanda                    1 487,72        1 486,82        1 544,73        1 507,62        1 413,31        1 696,89       2 061,66       21,5    
   Zambia                       27,47           26,89           28,09           25,38           21,80           24,54          27,82       13,4    
   South Sudan                  55,11           55,05           70,22          145,63          198,44          257,39         267,73        4,0    
   Botswana                     61,00           63,00           67,00           71,31           64,65           69,00          69,00          -    
   Swaziland                    88,00           91,00          105,54          106,95          102,69          101,16          95,89       (5,2)   
   WECA                                                                                                                                            
   Nigeria                   1 078,00        1 086,00        1 047,63        1 100,02        1 131,00        1 171,00      1 407,73#       20,2    
   Ghana                        12,17           12,28           12,73           13,66           12,90           15,92          16,45        3,3    
   Cameroon                  2 052,45        1 952,75        1 981,00        2 046,88        1 844,00        1 850,00       1 884,00        1,8    
   Ivory Coast               2 771,75        2 705,14        2 802,82        2 738,18        2 683,85        2 530,85       2 236,02      (11,6)   
   Benin                     3 616,00        3 506,59        3 458,95        3 595,94        3 283,25        2 962,55       2 793,69       (5,7)   
   Conakry                  14 791,78       16 409,98       18 657,08       18 393,40       19 926,34       20 093,59      19 890,34       (1,0)   
   Congo B                   4 926,03        5 054,11        4 714,69        4 455,24        4 031,72        4 328,90       3 788,47      (12,5)   
   Liberia                       3,73            3,51            3,34            3,45            2,44            2,59           2,44       (5,8)   
   Bissau                    1 978,20        2 403,63        2 321,77        2 136,85        2 157,54        2 691,26       2 182,31      (18,9)   
   MENA                                                                                                                                            
   Iran (joint venture)    112 513,01      121 147,23      126 364,00      125 604,00      128 907,00      134 721,00        143 178        0,7    
   Syria                       767,08          865,87        1 083,20        1 045,44        1 013,91        1 024,15       1 111,89        8,6    
   Sudan                        17,23           17,69           19,05           22,04           24,00           25,13          26,18        4,2    
   Yemen                       880,20          904,79          921,50          810,82          793,79          824,79         843,85        2,3    
   Afghanistan                 131,93          126,34          135,98          128,59          102,76          117,50         126,09        7,3    
   Cyprus                       16,93           17,15           17,41           16,20           16,08           16,03          15,83       (1,2)   
   * Restated.                                                                                                                                     
   #  New definition                                                                                                                               



ARPU
(US dollar)

    Country             1Q16         2Q16         3Q16         4Q16         1Q17         2Q17         3Q17        QoQ %    
   SEA                                                                                                                     
   South Africa        5,29*        5,47*        6,31*        6,69*        6,34*         6,51         6,69          2,8    
   Uganda               2,49         2,25         2,23         2,30         2,11         2,06         2,14          3,9    
   Rwanda               2,01         1,93         1,95         1,87         1,74         2,03         2,45         20,7    
   Zambia               2,45         2,63         2,82         2,60         2,27         2,68         3,05         13,8    
   South Sudan          2,06         1,50         1,24         1,95         1,84         2,19         2,27          3,7    
   Botswana             5,45         5,67         6,33         6,74         6,17         6,70         6,50         (3,0)   
   Swaziland            5,60         6,11         7,41         7,77         7,75         7,72         7,28         (5,7)   
   WECA                                                                                                                    
   Nigeria              5,40         5,09         3,38         3,52         3,60         3,61        4,31#         19,4    
   Ghana                3,13         3,19         3,23         3,27         2,87         3,67         3,73          1,6    
   Cameroon             3,37         3,29         3,36         3,38         2,98         3,17         3,40          7,1    
   Ivory Coast          4,55         4,63         4,76         4,51         4,33         4,35         3,99         (8,3)   
   Benin                5,94         5,95         5,87         5,92         5,30         5,09         4,99         (2,0)   
   Conakry              1,70         1,83         2,06         2,02         2,16         2,24         2,21         (1,3)   
   Congo B              8,22         8,66         8,01         7,35         6,51         7,43         6,78         (8,7)   
   Liberia              3,73         3,51         3,34         3,45         2,44         2,59         2,44         (5,8)   
   Bissau               3,24         4,11         3,94         3,52         3,48         4,62         3,90        (15,6)   
   MENA                                                                                                                    
   Iran                 3,73         3,99         4,02         3,94         3,86         3,84         4,35          7,3    
   Syria                2,09         1,80         2,16         2,02         1,96         1,98         2,15          8,6    
   Sudan                2,83         2,90         3,12         3,41         3,59         3,76         3,92          4,3    
   Yemen                4,10         3,71         3,69         3,24         3,17         3,29         3,11         (5,5)   
   Afghanistan          1,92         1,84         2,01         1,92         1,52         1,72         1,84          7,0    
   Cyprus              18,51        19,33        19,68        17,53        17,10        20,07        18,62         (7,2)   
   * Restated.                                                                                                             
   #  New definition                                                                                                            



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