Data demand boosts MTN revenue

2015-03-04 09:07 - Duncan Alfreds, Fin24
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MTN Group President Sifiso Dabengwa says that the cost of smartphones has to come down to ensure mass market adoption. (Duncan Alfreds, Fin24)


Cape Town - Mobile operator MTN [JSE:MTN] has increased revenue and growth largely thanks to the demand for data, the company announced on Wednesday.

In its annual results briefing MTN Group said that subscribers had increased by 7.5% to 223.4 million and revenue had also significantly jumped by 6.4% to a shade over R146.156bn.

However, data revenue was the star for the group with a massive 33.2% increase, contributing R27bn to the group's earnings.

In the key markets of South Africa and Nigeria, MTN saw positive news.

MTN SA returned to growth after a number of interventions to turn around flagging subscriber growth in 2013. This has allowed the company to increase its investment to take advantage of the demand for data.

Voice revenue

Despite a marginal decrease in revenue, MTN SA saw an increase of 8.9% in its subscriber base to 28 million.

South African prepaid subscribers in particular increased by 9.1% to 22.6 million due to promotional offerings.

"The South African operation will also accelerate its immediate capex plans to support our medium-term growth prospects, particularly in the data area," MTN said.

In Nigeria, MTN saw a respectable 12.1% growth despite regulatory pressure, but the company has sold its towers in that country which may have artificially inflated those revenue numbers.

MTN said that while voice revenue was still a major contributor to the bottom line, indications are clear that data is the future.

"Voice revenue contributed 61.2% to total revenue, a decline of 2.0 percentage points in the year due to aggressive price competition and stronger growth in data services. Despite this, MTN remained competitive and maintained market share in most key markets."

In SA, consumers have seen a significant decrease in voice call rates from mobile operators. Most calls now cost under R1 per minute on prepaid and contract packages.

Expenditure programme

However, the stimulus may have been the regulator Icasa which insisted on lowered MTRs or the rate that operators pay each other for calls that terminate on rival networks.

Icasa had insisted that senior operators MTN and Vodacom pay juniors Telkom Mobile and Cell C a larger share of MTR to drive market competition.

"Group interconnect revenue declined by 2.9% (5.9%) following cuts in termination rates in our Nigerian and South African operations. These came into effect in April and May respectively," MTN said.

For 2015, MTN said that in Nigeria the company expects some difficulties because of the volatile oil price and currency, adding that it is focused on delivering better data pricing to boost revenue in that market.

In SA, the company plans an expenditure programme after lowering expenditure by 16.3% in 2014. This includes expansions of 3G and LTE sites, despite a lack of spectrum allocation for the latter.

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