MTN delivers steady progress despite challenging conditions in key markets
31 October 2019
MTN Group today announced sustained momentum in its results for the 9 months to September 2019 with service revenue growing 9,6% and its EBITDA margin improving by 0,6% to 35,1%. During the quarter the group added 3,5m subscribers and now serves 244 million customers across its 21 markets.
Commenting on the update, MTN Group CEO Rob Shuter said: “Service revenue growth and improvements in our EBITDA margin continued into the third quarter. We remain committed to driving access to internet and financial services and in Q3 we added 4.7 million active data users and 2.2 million Mobile Money subscribers across the portfolio. Our Ayoba messaging platform is now available across five markets and is already recording 515,000 active users per month.”
Overall, solid performances in Nigeria and Ghana offset the headwinds in South Africa, which was impacted by the weaker consumer demand and changes in ICASA’s End User Subscriber Service Charter Regulations which have impacted out-of-bundle (OOB) usage. Notwithstanding these pressures, in the third quarter MTN South Africa saw an improving trend in both prepaid and enterprise service revenues. Consumer post-paid in South Africa remained strong in a competitive market with service revenue growing at 5,8%.
At June 2019 MTN had not recognised R393 million of unpaid revenue from its roaming agreement with Cell C and an impairment of R211 million had also been raised. Since the end of June 2019 to date, Cell C has made payments amounting to nearly R750 million, in line with an agreed payment plan. MTN has continued its conservative accounting for the Cell C roaming contract and only payments receive during the third quarter were processed, and all against the outstanding balances as at June 2019. We continue to work with Cell C on an expanded network deal and are seeing good progress to date.
Providing an update of the asset realisation programme (ARP) MTN Group CFO Ralph Mupita said: “As at June 2019 we had achieved R2.1bn of the 3-year R15 billion target announced in March this year. We continue to make steady progress in this regard and, following American Towers Corporation’s announcement of its acquisition of Eaton Towers, we are in advanced discussions to dispose of our 49% holdings in ATC Ghana and ATC Uganda which we value at between R7bn and R8bn.
The post IPO lock up period of Jumia, in which we have an 18.9% stake has expired and, as at 29 October, this stake is valued at approximately R1.4 billion. We also continue to await regulatory processes for the redemption of MTN Nigeria preference shares that have a value of $315 million for MTN Group. Finally, Econet’s unsolicited offer to acquire our 53% stake in Mascom has been terminated following certain conditions of the sale not being met.”
The Group expects an improved performance in South Africa in 2020 as the effects of the End User regulation on OOB usage moderate, the enterprise division returns to growth and the Cell C situation stabilises. We are confident that in Nigeria we will maintain service revenue and EBITDA growth in line with the medium-term guidance. This will be delivered as we improve our data revenue performance with increased 4G coverage as we utilise our 800 Mhz spectrum. We are also pushing ahead with our mobile money strategy through the super-agent licence, with 66,282 registered agents currently and a target of 100,000 by year end.
Shuter concludes: “Although conditions have been tougher in the year, we have sustained our performance in 2019 and looking forward, we are focussed on executing our BRIGHT strategy to deliver sustainable growth in our operations and to simplify our portfolio to reduce risk and improve returns. We remain resolute and committed to building our digital operator strategy and delivering on our medium-term targets and dividend policy.
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