MTN : quarterly update

MTN released a quarterly update for the period ended 30 September 2016.

Highlights
- New Group President and CEO, Rob Shuter to join MTN on 13 March 2017
- Group transformational project commenced during the quarter under review
- MTN has commenced the repatriation of funds from MTN Irancell to MTN Group
- Group subscribers increased 0,9% quarter-on-quarter (QoQ)
- MTN South Africa delivered encouraging improvement in EBITDA margin (+200bp QoQ)
- MTN Nigeria reported a 1,2% decline in revenue Q3 2016 year-on-year (YoY) compared to a 6,2% decline in Q1 2016 (YoY)
as the operation continued to deliver incremental improvements in revenue
- Significant network improvement across the Group, particularly in the Nigerian and South African operations
- Group capex increased 10,5% YoY to R21 230 million with 2 669 3G and 1 995 4G sites added
- Constant currency data revenue increased 21,0% YoY, to contribute 26,4% to total revenue
- Voice and data traffic increased 1,8% and 142% respectively YoY

In the latest development on this matter, the Senate of the Federal Republic of Nigeria has through the Senate Committee on Banking and Insurance and other Financial Institutions commenced an investigation into the alleged 'unscrupulous violation' of the Foreign Exchange (Monitoring and Miscellaneous) Act. MTN Nigeria, four commercial banks, certain MTN Nigeria directors and shareholders, the Central Bank of Nigeria and others appeared before the Senate on 20 October 2016 at the outset of this investigation.

The allegations are that USD13.97 billion was repatriated illegally by MTN Nigeria through its bankers. MTN Nigeria and its bankers are cooperating with the investigation with a view to resolving the matter as expeditiously as possible. In the interim the CBN has instructed the banks to suspend any remittance of dividends until further notice. MTN Nigeria is committed to the payment of the NGN330 billion fine related to the late disconnection of 'improperly registered' SIMS and as such has not declared a dividend since April 2015 and MTN Nigeria has no intention to make any dividend payments over the next six months. MTN Nigeria continues to refute the allegations that MTN Nigeria had improperly repatriated funds from Nigeria. Consequently MTN Nigeria will strongly defend any action that would be prejudicial to its interest.'

SEA
MTN South Africa reported a marginal decline in subscribers of 0,5% QoQ to 29,7 million. This was as a result of a 0,7% decline in the pre-paid subscriber base to 24,5 million, largely due to churn from low revenue-generating customers. The post-paid subscriber base increased by 0,7% to 5,2 million, benefiting from an improved customer experience, network quality, segmented customer offerings and attractive price plans. Data revenue increased by 15,1% YoY and contributed 34,4% to total revenue. This was driven by the increased volumes of high-denomination data bundles sold and attractive digital offerings. The increase in the number of smartphones and improvements made on the network also contributed to data revenue growth. The number of smartphones on the network increased by 9,3% to 9,2 million YoY. ARPU increased by 10,4% QoQ.

Other SEA - across the rest of the region, the number of subscribers increased by 1,0% to 23,3 million, mainly driven by good growth in Uganda. MTN Uganda increased its subscriber base by 2,9% QoQ to 10,2 million, supported by a special sales channel and a reduction in churn. Constant currency data revenue increased by 20,4% YoY and contributed 33,7% to total revenue. This was supported by our LTE leadership position, smartphone subsidisation and attractive data bundles. The operation recorded 1,3 million smartphones on the network . Local currency ARPU remained constant QoQ.

WECA
MTN Nigeria reported a 2,5% increase in its subscriber base to 60,5 million (QoQ). The reported subscriber base was negatively impacted by the exclusion from our active base of approximately 3.1 million subscribers relating to a change in subscriber accounting rules where we no longer account for subscribers whose activity was based on the receipt of a bulk SMS. On the upside subscriber numbers were supported mainly by reconnection through proactive engagement following their disconnection in line with regulatory requirements earlier this year. MTN Nigeria continues to engage the regulatory authorities on improving the approval process for promotions, products and services following the re-instatement of regulatory services to MTN.

Constant currency data revenue increased by 6,7% and contributed 20,4% to total revenue. This is largely the result of a weaker macro-economic environment negatively impacting consumers, a decline in the effective data tariff because of competition and regulatory requirements impacting out-of-bundle billing. The data traffic increased by 43,8% YoY, benefiting from an improved data network and increased smartphone penetration. The number of smartphones on the network increased by 59,4% to 19,2 million YoY. Local currency ARPU decreased by 1,4% QoQ.

Other WECA - the remainder of the region increased its subscriber base by 2,3% to 47,6 million, driven by growth in MTN Ghana and MTN Ivory Coast. MTN Ghana delivered a strong performance and grew its subscriber base by 2,7% to 18,0 million. This was supported by attractive voice and data bundle propositions. Constant currency data revenue increased by 72,8% and contributed 41,7% to total revenue. This was helped by strong growth in digital and mobile financial services as well as the launch of LTE services. Local currency ARPU increased by 3,7% QoQ. The number of MTN Mobile Money customers increased by 10,7% QoQ to 7,8 million.

MTN Cameroon's subscriber base decreased by 1,3% to 9,5 million, impacted by the subscriber registration process. Constant currency data revenue increased by 28,3% and contributed 19,0% to total revenue. The increased focus on the monetisation of its LTE network together with higher volumes of LTE handsets during the quarter contributed positively to data revenue growth. The number of Mobile Money customers increased by 13,2% to 2,7 million QoQ, supported by improved distribution.

MENA
MTN Irancell increased its subscriber base by 1,1% QoQ to 47,8 million in a highly penetrated market. Constant currency data revenue increased by 61,5% QoQ and contributed 41,5% to total revenue despite a decrease in data tariffs. This was largely due to a successful leadership position on its data network experience, aggressive 3G and 4G rollout as well as increased smartphone penetration. The number of smartphones on the network increased by 35,1% to 29,2 million. Local currency ARPU increased by 4,3% QoQ.

Other MENA - the subscriber base in the remainder of the region decreased by 3,9% to 25,8 million. MTN Sudan's subscriber base decreased by 13,0% to 7,7 million due to the subscriber registration process. However, constant currency data revenue increased by 78,4%, driven by digital content, and contributed 28,2% to total revenue. Local currency ARPU increased by 7,7% QoQ.