Consumer pressure hits MTN

Johannesburg - South African mobile communications group MTN Group on Thursday reported adjusted headline earnings per share down 10.9% to 363.8 cents for the six months ended June 30.

The group reported revenue up 24.2% to R57.3bn from June 2008, adding that its performance was "satisfactory considering the economic downturn which affected markets worldwide".

The Group reports its performance by region, namely South and East Africa (SEA), West and Central Africa (Weca) and the Middle East and North Africa (Mena), with the Weca region contributing 47% of total revenue, up 1% compared with the six-month period to 30 June 2008. The SEA and Mena regions contributed 34% and 19% respectively of the MTN's total revenues.

Subscribers grew 14% to 103.2 million from December 2008, while numbers had increased by 39% since June 30, 2008.

MTN South Africa's subscriber base grew by 62 000 during the review period to 17.2 million. "The disappointing increase in subscribers was due to a combination of factors including challenges on the network and supporting systems, slowing GDP growth, pressure on consumer spend, and competitor activity in the first half of the year," it said.

The prepaid subscriber base declined by 52 000 during the period, while average revenue per user (Arpu) in the prepaid and postpaid market segments declined by 5% to R92 and 10% to R362 respectively.

In line with the strong growth in revenue, MTN said its earnings before interest, tax, depreciation and amortisation (Ebidta) increased by 24.8% to R24.5bn.

The group said growth in earnings was negatively impacted by functional currency losses of R2.8bn, from a R900 000 gain in 2008 on shareholder loans, receivables and cash.

MTN Group's assets decreased by 14% to R146bn compared with R170bn at December 31, 2008. "This was largely as a result of the depreciation of the closing rate of the respective local currencies against the ZAR," it said.

MTN Nigeria subscribers grew by 19% over the six months to 27.3 million at June 2009. "MTN Nigeria recorded strong growth in the first half and improved market share to 48%," the group said, adding that aggressive network rollout continued in the first half of 2009, as MTN Nigeria rolled out 426 2G and 236 3G BTSs.

"The 3G rollout is gaining momentum with 787 3G BTSs now live and the completion of phase 2 of the 3G rollout under way. A further 1 548km of transmission expansion to improve the network is in progress(66.42% complete)," MTN said.

Regarding the MTN/Bharti deal, MTN said reaffirmed that the exclusivity period had been extended to September 30. "No decision or agreement to acquire any shares or Global Depository Receipts or implement the potential transaction outlined above has yet been made by the boards of either MTN or Bharti," it said.

Looking ahead MTN said: "There are some indications that global economic conditions may be starting a slow recovery although many of our markets remain relatively vulnerable at present.

"Competition across MTN's footprint is likely to continue to increase. "Shorter-term prospects in South Africa remain challenging, compounded by the impact of new subscriber registration requirements from August 1, 2009," MTN concluded.

- I-Net Bridge