MTN Group reports organic revenue growth of 6.8% for 2017, despite drop in subscribers

Thursday 8 March 2018 | 10:29 CET | News

MTN Group said its revenue increased by 6.8 percent on an organic basis to ZAR 132.8 billion in 2017. Underlying service revenue rose by 7.2 percent to ZAR 124.41 billion, thanks to a recovery in Nigeria. Outgoing voice revenue remained largely flat, which it said was a positive re-enforcement of its work to stem the decline in the voice contribution, particularly in Nigeria, where outgoing voice revenue went up by 7.5 percent. 

On a reported basis, revenues were down 10.2 percent and service revenues fell 10.8 percent, hurt by the devaluation of the Nigerian currency. MTN said it aims to maintain high single-digit growth in organic service revenues in the next few years, driven by mid-single-digit growth from South Africa and double-digit growth from Nigeria, while also lifting its EBITDA margins. This will be supported by continued growth in data revenues, which rose 19.4 percent last year, or 34.2 percent on an organic basis, to ZAR 28.2 billion. 

MTN reported headline earnings per share (HEPS) of ZAR 1.82 for the year, compared with a ZAR 0.77 loss per share in 2016, when performance had been hit by the Nigerian regulatory fine to the tune of ZAR 5.00. In 2017, the Nigerian regulatory fine interest reduced HEPS by ZAR 0.46. HEPS also was hit by a number of one-off and non-cash post-tax items totalling ZAR 4.83 in 2017. 

The adjustments include costs related to the Nigerian regulatory fine of ZAR 0.46, hyperinflation adjustments excluding impairments of ZAR 0.96, net foreign exchange losses of ZAR 1.59, MTN Zakhele Futhi share-based payment expense of ZAR 0.24 and a loss on the derecognition of a loan to an IHS tower subsidiary of ZAR 1.58.

The group finished the year with 217.23 million subscribers, based on updated definitions, of which 69.1 million used data services and 21.8 million mobile money services. The total number is down from 230.23 million reported for 30 September and 240.38 million a year earlier. MTN said subscriber numbers in Cameroon in particular were further affected by the disconnection of approximately 3 million subscribers to ensure adherence to regulatory requirements on subscriber registration, as well as regulatory-related disconnections in Uganda, where MTN disconnected 750,000 subscribers. 

Group EBITDA increased by 15.2 percent to ZAR 47 billion, held back by a 6.6 percent decrease in MTN Nigeria's EBITDA as a result of higher foreign-denominated expenses following the depreciation of the naira against the US dollar. This was, however, offset by a 9.5 percent increase in MTN South Africa's EBITDA. MTN Uganda (up 27.8%), MTN Ghana (up 19.4%) and MTN Cote d'Ivoire (up 9.1%) contributed positively to group EBITDA, while MTN Cameroon recorded a 30.1 percent decline in EBITDA. The group EBITDA margin decreased by 1.4 percentage points to 34.0 percent. 

The group depreciation charge increased by 6.2 percent as a result of higher organic capex over the past two years. The growth in depreciation was to some extent mitigated by the stronger rand. Amortisation costs increased by 9.5 percent, mainly because of higher spending on software in the previous period. Non-hyperinflation-related goodwill impairments consisted of impairments in MTN Sudan (ZAR 983 million), MTN Afghanistan (ZAR 841 million) and MTN Yemen (ZAR 807 million).

Capex decreased by 10.8 percent to ZAR 31.5 billion for the year, but was up 2.0 percent on a constant currency, pro forma basis, in line with guidance given at the interim period. Capex is expected to fall to around ZAR 27.7 billion in 2018, led by reduced spending in the two largest markets Nigeria and South Africa. 

MTN's adjusted free cash flow rose 3.7 percent on an underlying basis to ZAR 15.5 billion in 2017. The board declared a final dividend of ZAR 4.50 per share, in line with the 2017 guidance of a total dividend of ZAR 7.00 per share communicated in March 2017. The dividend is expected to fall to ZAR 5.00 in 2018, due to the currency fluctuations in MTN's market. The company said it aims to grow the dividend 10-20 percent in the medium term, based on expansion in operating cash flow. 

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