Republic of South Africa incorporated MTN Group reported that its consolidated subscriber base decreased by 1.4% quarter-on-quarter to 229.339 million in 22 countries across Africa and the Middle East for the period ended 31 March 2016, impacted by the disconnection of subscribers in Nigeria related to ‘the substantial subscriber registration process and compliance exercise’. MTN Nigeria reported a 6.9% fall in users to 57.045 million, largely stemming from the disconnection of some 4.5 million SIMs in February 2016 – which was related to the registration compliance exercise. Here, the Group notes: ‘We believe we have now dealt with all the subscribers who were considered to be non-compliant. The operation continues to focus on reconnecting subscribers through proactive engagement and win-back offers. Following the reinstatement of regulatory services in March 2016, MTN Nigeria continued to engage the regulatory authorities and we hope to receive approval from the regulator for approval of promotional products and services during the current month.’
Meanwhile, in its home market MTN South Africa booked a 1.7% q-o-q fall in subscribers to 30.077 million impacted, it said, ‘by seasonality and the alignment of the subscriber base recently’. The pre-paid subscriber base declined by 1.8% q-o-q to 24.9 million, largely impacted by seasonal trends following strong promotions in Q4 2015. The post-paid base decline of 0.8% to 5.2 million was attributed to the alignment of the Autopage subscriber base to MTN’s, the disconnection of telemetry SIMs and the expiration of legacy low-cost packages. The company added that first-quarter subscriber growth across many markets was also impacted by the weak macro-environment, particularly in those markets reliant on oil exports. But a depreciation in the rand against a number of the operational currencies boosted MTN’s revenue for the quarter.
MTN’s other South and East Africa (SEA) regional units – Uganda, Rwanda, Zambia, South Sudan, Botswana and Swaziland – reported a collective 2.0% increase in users to 22.7 million, driven it said by strong growth in Uganda where the local unit increased its subscriber base by 7.8% q-o-q to 9.6 million supported by MTN Zone and attractive bundled offers. In Uganda constant currency data revenue increased by 23.8% year-on-year, MTN Group said, and contributed 32.1% to total revenue. This was supported by the rollout of 62 3G and 35 LTE sites during the quarter. Elsewhere, MTN noted that MTN Syria, MTN Yemen and MTN Afghanistan remain profitable, although they continue to operate in ’highly challenging environments impacting the region’s subscriber growth’.
Commenting on the results, MTN group executive chairman, Phuthuma Nhleko, said: ‘During the first quarter of 2016, the Group was impacted by the ‘after shocks’ of the events that took place towards the end of 2015, mainly the subscriber registration process in many of the countries in which we operate, with Nigeria being the largest. In order to mitigate any future regulatory challenges, the Group took an exceptionally conservative stance by disconnecting all subscribers who could possibly be deemed to be non-compliant. This has had a significant unfavourable impact on total subscriber growth and revenue in 1Q16. Nonetheless, we believe this resolve to address compliance matters decisively has put the Group on a solid footing as regards the subscriber registration process and regulatory matters in general. Further, the Group has undertaken a number of ‘back to the basics’ structural and operational initiatives that will hopefully reset and position the Group for future growth in a rapidly evolving sector. Subscriber growth was also impacted by the weak macro-environment, particularly in those markets reliant on oil exports. The trading environment was highly competitive.’
MTN Group expects to add a net 11.9 million new subscribers by the end of 2016, down from an earlier forecast of 12.5 million, an indication perhaps that it expects to see the continued impact of tough economic and regulatory environments on its short term future growth prospects.