MTN Group reported a 14 percent increase in revenue to ZAR 78.88 billion for the first half of 2016 from ZAR 69.21 billion in the same period in 2015. This was positively affected by the weaker rand; at constant exchange rates, revenue rose 1.5 percent.
The number of subscribers remained flat at 232.6 million on 30 June compared with 31 December 2015. MTN cut its full-year forecast for subscriber growth to 8.075 million new customers, from an estimate in March of 11.950 million, mainly due to slower growth in Nigeria and Uganda.
MTN said data revenue growth was supported by healthy double-digit growth in the majority of operations despite a continued reduction in data pricing as a result of competition. Data traffic increased 135.3 percent while the effective data tariff declined 46.9 percent (in constant currency US dollar terms). Digital revenue contributed 32.1 percent to total group data revenue, supported by healthy growth in mobile financial services and an increased uptake of content services.
EBITDA decreased 38.4 percent to ZAR 18.88 billion in H1. This was negatively affected by the accrual for the Nigerian regulatory fine (ZAR 10.499 billion) following the agreed settlement on 10 June. The deferred profit of ZAR 18 million from the sale of towers in Ghana and an adjustment for hyperinflation of ZAR 90 million positively affected group EBITDA.
Excluding these one-time items, EBITDA decreased by 3.3 percent to ZAR 29.27 billion. This was positively affected by foreign exchange movements of 23 percent, of which South Sudan made up 8.7 percent. The group reported a basic headline loss per share of ZAR 2.71, largely caused by the Nigerian regulatory fine expense of ZAR 4.74, hyperinflation of ZAR 0.20 and losses incurred on the group’s investments in Rocket of ZAR 0.27 and tower companies of ZAR 0.136.
The headline figure was also hit by forex losses of ZAR 1.35 and by a range of professional services relating to the negotiations that led to a reduction in the Nigerian regulatory fine of ZAR 0.73. Excluding these impacts, HEPS declined 11.7 percent to ZAR 5.94. The net loss totaled ZAR 5.5 billion versus a profit of ZAR 11.9 billion a year ago.
Capex increased 27.4 percent to ZAR 13.85 billion, of which ZAR 1.24 billion was related to foreign currency movements. Over the full year, MTN has budgeted ZAR 35.1 billion in capex.
The board recommended an interim dividend of ZAR 2.50 per share and said it expects to pay at least ZAR 7 per share over the full year.
MTN said it has hired external advisers to conduct a strategic review of its operations in order to find ways to address the drop in voice revenues, meet growing customer demand for data services and address the challenges in some of its market.
Some of the steps to be taken include setting up an advanced analytics to help drive network quality and broadband connectivity, especially in key locations with high demand. Operating efficiencies and improving customer service also remain a priority, with a focus on the digitisation of service channels and leveraging mobile money as a distribution channel. MTN also aims to improve network optimisation and opex management, including the implementation of zero-based budgeting.
For growth, it will explore possible acquisitions in its footprint in Africa and the Middle East, while also building new revenue streams, particularly Digital services, outside the core business. New revenue streams are expected to increase their contribution over the next 12-18 months.
