MTN Group books 4.9% drop in first-half revenue, impacted by exchange rate fluctuations

6 Aug 2015

South African telecommunications operator MTN Group has released its interim financial results for the six months ended 30 June 2015, reporting a 4.9% decline in turnover to ZAR69.21 billion (USD5.42 billion). The pan-regional operator – which connected over 230 million people in 22 countries at the end of the period under review – blamed the drop largely on exchange rates, stating: ‘Movements in the majority of the group’s operational currencies against the rand negatively impacted performance. The rand strengthened by 8.7% against the Nigerian naira, 23.1% against the Ghanaian cedi, 10.6% against the Central African Franc, 5,8% against the Ugandan shilling, 36.9% against the Syrian pound and weakened 5,7% against the Sudanese pound.’ Further, MTN reported that the ‘challenging operating environment’ in Nigeria was reflected in a 1.1% year-on-year fall in turnover at the unit, MTN South Africa booked a 1.4% y-o-y fall in sales due to declining handset sales, and the group’s ‘Large OpCo’ cluster (covering operations in Ghana, Cameroon, Cote d’Ivoire, Uganda, Syria and Sudan) reported revenue decreasing by 6.3% to ZAR14.80 billion in H1 2015 compared to the year-earlier period. More encouragingly, MTN’s ‘Small OpCo’ cluster booked a 0.8% increase in revenue to ZAR10.00 billion, supported by healthy double digit growth in Congo-Brazzaville, Zambia, Guinea Bissau and South Sudan.

Group EBITDA reached ZAR30.27 billion in the first six months of this year, down 10.1% on the corresponding period of 2014, impacted in particular by a 13.2% fall in EBITDA in Nigeria, down to ZAR14.13 billion, an 8.6% dip for the Large OpCo cluster (to ZAR5.22 billion) and a 6.6% fall for the Small OpCo cluster to ZAR3.84 billion. The group’s MTN South Africa business did, however, increase its pre-tax earnings by 5.4% from ZAR6.38 billion to ZAR6.72 billion, it said. Group CAPEX stood at ZAR10.85 billion for H1 2015, up 18.0% from the ZAR9.12 billion spent in the year-ago period. MTN said it continues to focus on improving network quality, increasing capacity and expanding the footprint of its 3G, LTE and fibre networks. During the period, the group’s operations rolled out 1,335 2G, 5,048 largely co-located 3G and 2,475 LTE sites, as well as deploying 722km of long-distance fibre.

‘As we move into the second half of the year there will be an increased focus on building staff engagement and improving customer service in the South African operation. The operation will also accelerate its CAPEX plans to support medium term growth prospects, particularly in the data area. Corrective measures have been implemented to improve handset sales. We expect the balance of the year to remain challenging for MTN Nigeria. Notwithstanding tough operating conditions, there will be a strong focus on active subscriber management and providing more competitive voice and data offerings to high value customers. We expect the Large and Small OpCo clusters to maintain the growth trajectory of the past six months. We will continue to increase data revenue by encouraging uptake through increased smartphone penetration and new pricing strategies. We will also continue to create a distinct customer experience through investing in our networks to support data growth and improving value and segmentation offers,’ it said in the press release.

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