MTN Group continues steady subscriber growth with 74,1 million subscribers
HIGHLIGHTS OF INTERIM RESULTS for the period ended 30 June 2008
- Group subscribers up 53% to 74,1 million
- Revenue increased 35% to R46,1 billion
- EBITDA up 29% to R19,6 billion
- Adjusted headline EPS up 26% to 408,5 cents
The MTN Group is pleased to announce a sound performance, with 74,1 million subscribers across its 21 operations as at 30 June 2008. This is a 53% increase in subscribers compared to the same period last year (June 2007:48,3 million). This is against the background of increased investment in infrastructure and distribution to cater for ever increasing demand.
In the six months from 31 December 2007, the West and Central Africa (WECA) region increased its subscribers by 16%, to 32,5 million subscribers. The South and East Africa (SEA) region increased its subscribers by 9% to 21,0 million subscribers, followed by the Middle East and North Africa (MENA) region which recorded 47% increase to 20,6 million subscribers. The growth in the MENA region was mainly driven by MTN Irancell, which recorded a sterling increase of 93% to 11,6 million subscribers from 31 December 2007.
OVERVIEW OF RESULTS
The MTN Group's revenue increased by 35% to R46,1 billion compared to R34,2 billion recorded on 30 June 2007. The Group's increase in revenue was mainly driven by MTN Nigeria and MTN South Africa. MTN Nigeria increased its revenue by 39% to R13,4 billion and MTN South Africa recorded 18% increase to R15,4 billion as compared to the six- month period ending 30 June 2007.
The Group's earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 29% to R19,6 billion (30 June 2007: R15,2 billion). The WECA, SEA and MENA regions contributed 57%, 30% AND 11% respectively to total Group EBITDA. The EBITDA is compared to the six-month period ending 30 June 2008 which saw WECA, SEA and MENA region recording 54%, 34% and 8%
respectively. Adjusted headline earnings per share increased to 408,5 cent, a 26% increase for the six-month period from the 324,7 cents recorded on 30 June 2007.
The average revenue per user (ARPU) marginally declined in most operations. This is consistent with the increased penetration into lower usage segments.
The Group's profit after tax (PAT) increased by 11% to R7,0 billion compared to the six-month period ended 30 June 2007.
The Group's tax charge increased by R2,4 billion compared to the six months ended June 2007. This increase is mainly due to the end of the pioneer status tax holiday in Nigeria in March 2007, resulting in a tax charge of R2,9 billion for the period under review (30 June 2007: R1,0 billion).
The end of the pioneer tax status in Nigeria affected the tax bill for the year 2007/2008. Taxable profits in Nigeria increased significantly at 60% income and 4% Education Tax.
Says MTN Group president and CEO, Mr Phuthuma Nhleko: “I'm pleased with the strong growth in subscriber numbers across all our operations. As the market becomes more competitive, we continue to explore ways of maximizing our revenue and continue to provide reliable network services to consumers.
“The WECA, SEA and MENA region have all been aggressively rolling out network in response to high demand, and continue to provide good network quality. The aggressive network roll out will continue throughout the course of this year.
We are confident that MTN will remain a dominant player in emerging markets, due to our strong balance sheet.”
MTN South Africa increased its subscriber base by 5% to 15,6 million as at 30 June 2008 compared to 14,8 million recorded on 31 December 2007. The increase can be attributed to 6% growth in prepaid subscribers to 13 million and 4% growth in postpaid subscribers to 2,6 million. This was a steady performance in an increasingly competitive environment, taking into account challenges such as the slowdown in consumer spending in many sectors, rising interest rates, inflation and the rise in fuel prices.
The introduction of MTN zone (a prepaid dynamic tariffing price plan) in February 2008, together with the continued impact of low denomination vouchers, played a major role in the acquisition of prepaid subscribers. MTN Zone recorded 4,5 million users as at 30 June 2008, with 400 000 of the users estimated to be new connections.
ARPU of the prepaid segment remained stable at R92 while postpaid ARPU increased to R405. Prepaid ARPU performance was positively influenced by the continued success of the low denomination vouchers, and higher average usage by the subscribers that signed up for MTN Zone, as compared to other prepaid subscribers.
MTN South Africa further acquired the remaining 51% shareholding of Cell Place (Pty) Limited and also exercised the right to acquire the remaining 51% of I-Talk (Pty) Limited to improve the efficiency of the distribution channel. Both these transactions, including Verizon, are subject to Competition Commission approval.
MTN Nigeria increased its subscriber base by 12% to 18,6 million from 31 December 2007. ARPU declined slightly to US$16 from US$17 reported for the period ending 31 December 2007. The trend is in line with an increased competitive environment and deeper penetration into the mobile market estimated at 31%. Market share declined to 43% compared to 44% recorded at 31 December 2007.
MTN Nigeria continued with its aggressive network rollout during the first half of the year and 758 new BTS (Base Transceiver Station) sites were integrated into the network and 494 3G sites are now live. Over 1 200 km of new microwave backbone routes are already in progress and will be completed by the end of 2008.
MTN Irancell increased its subscriber base by 93% to 11,6 million subscribers from 31 December 2007. The aggressive subscriber acquisition rate can be mainly attributed to Buy One Get One Free (BOGOF) campaigns, competitive sim pricing which lowered upfront cost of ownership, attractive basic and promotional tariff plans. Market share increased from 23% to 32% as at 30 June 2008. Mobile penetration moved up from 37% to 50% over the same period.
MTN Irancell's ARPU declined marginally from US$10 in December 2007 to US$9 for this half-year year period as the operation continued to attract low income subscribers. During the half-year period, 696 new BTS sites were rolled-out, bringing the total live sites to 2 649.
The operation now has seven established dealers of its products with 6000 registered dealer outlets 40 000 points of sale countrywide.
MTN Ghana recorded a 24% increase in subscribers to 4,9 million from 31 December 2007. The performance was influenced by a combination of usage-based promotions, direct consumer engagements and network coverage expansion. MTN Zone was successfully launched on 1June 2008 and did not significantly affect the subscriber acquisition for the period.
ARPU declined by US$1 as compared to 31 December 2007. Market share remained at 52%. The tariffs were adjusted in June 2008 to partly absorb the 6% CST revenue tax that came into effect on 1 June 2008.
MTN Ghana rolled out 483 new BTS sites and now has a total of 1 271 sites.
MTN Sudan grew its subscriber base by 20 000 to 2,1 million from 31 December 2007. Stiff competition combined with regulatory requirements to disconnect all prepaid subscribers with no personal information recorded resulted in lower connections and a high level of disconnections. A total of 1,1 million subscribers were disconnected during the beginning of the second quarter this year.
ARPU declined by US$5 from 31 December 2007. Due to lower minute usage by subscribers and lower effective tariffs, all the players in the industry offered cheap on-net calls to ring fence their market shares.
A total of 191 BTS sites were rolled out during the six-month period and the core network capacity has been increased from 3 million to 4,1 million subscribers.
MTN Syria increased its subscriber base by 9% to 3,4 million from 31 December 2007. The growth can be mainly attributed to the reduction in connection fees and effective churn management.
ARPU for the period was US$19, a US$1 decrease from the year ended 31 December 2007. The decrease can be attributed to penetration into the lower usage segments of the market, high inflation which impacts negatively on disposable income and a 20% tariff reduction in the last quarter of 2007.
MTN Syria rolled out 239 new BTS sites and ran a 3G trial period over the past 12 months, and has since received government approval approvals for commercial launch of the services. Negotiations are also underway with the government authorities to convert the current Build-Operate-Transfer (BOT) arrangement into a full licence.
OPERATIONAL DATA AS AT 30 JUNE 2008
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