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Johannesburg - Cellular giant MTN has reported growth in subscribers across the group, with the exception of South Africa where it has lost ground in the market.
MTN's South African subscriber base dropped by 6% to 16 million, despite a 28% increase in its global base to 116 million.
The group said that the Regulation of Interception of Communications Act (Rica), which requires subscribers to register their SIM cards, was one of the contributing factors to subscriber losses, along with system troubles and fierce competition.
In Iran, by contrast, MTN [JSE:MTN] grew its subscriber base by 45%, thanks to improved coverage in the country along with a reduction in connection costs.
The group reported a mixed bag of results on Thursday for the year to-end December 2009, disclosing a 9% increase in revenue to R112bn as well as a 17% decrease in headline earnings per share (Heps) to 754.3c. The group's earnings before interest, tax, depreciation and amortisation margin also shrank by one percentage point to 41.1%.
CEO Phuthuma Nhleko said the local currency had a substantial effect on the group's results.
"The most overarching element of these results for MTN as a rand-reporting company is the rand itself, and the impact of forex on the income statement," he explained.
Phuthuma said about 80% of MTN's earnings come from outside South Africa. "Revenue would be up by between 10% or 12% without the impact of forex," he said.
Nhleko described the company's dividend policy as "conservative", but has decided to relax that policy.
"Given the anticipated reduction in capex going forward, with 2009 as the peak capex year, we felt comfortable that we can now be more relaxed in terms of the dividend policy," he said.
"This has enabled us to declare a dividend of 192 cents per share, which is close to a cover of four. We may revise that, but for now that is the direction."
Not an easy year
Nhleko described 2009 as a challenging year.
"Not withstanding all those challenges, we were still able to perform satisfactorily. The vision of the group remains unchanged."
Nhleko said that growth in most markets could be attributed to fairly significant spend on capacity while competitors were cutting back.
"That said, we've seen enormous competition in a country like Ghana that now has five operators, soon to be six." said Nhleko.
"This has to be our most competitive market, but we have managed to maintain a 55% market share in it."
He said that the lowering of interconnect rates in South Africa and other countries had had a negative impact on results, along with the effect of Rica and similar legislation in virtually all markets MTN operate in, creating further pressure in terms of operations.
Nhleko said that the group planned to add 20 million subscribers in 2010.
"In South Africa, being in a mature phase, we plan to add 800 000 subscribers this year, which is 50% less than what we've done in the past," he said.
Better than expected
ICT analyst for Front & Sullivan Spiwe Chireka said she was "pleasantly surprised by the results".
"We expected things to be worse for MTN - especially in its two biggest markets of Nigeria and South Africa. But Nigeria has shown strong subscriber growth for the group and while revenue growth was very low in South Africa, it is at least up," Chireka said.
She warned that there could be trouble on the horizon, however. "We have not seen the overall impact of things like Rica and interconnect yet," she said.
"We will start to see it now; both in SA and in Nigeria and these effects will become evident in the next reporting period.
"Despite SA being a mature market, we are also still an emerging economy and MTN should be able to pull off higher revenue growth than it has. Even in more developed markets than ours, telecoms providers have managed to show better growth than what MTN has in South Africa."
Chireka said MTN would be best served by extending its focus beyond mobile telephony and into divisions like MTN business, which held good opportunity for growth. She added that MTN's competitors have a lead in the market with their operations in this regard.
- Fin24.com
