News
Weak economy, fierce competition, Nigeria fine take their toll on South Africa-based telco’s results.
MTN this week reported lower full-year revenue and a 37% decline in profit.
In a statement, the South Africa-based telco group attributed the lacklustre performance to a "challenging operating environment" characterised by weak macro-economic conditions, increased competition, and heightened regulatory pressure, particularly in Nigeria.
Indeed, MTN Nigeria faces a US$3.9 billion (€3.55 billion) fine for failing to disconnect millions of unregistered SIM cards in time. The company is challenging the penalty imposed by the Nigerian Communication Commission (NCC); the two sides have until 18 March to reach a settlement otherwise the matter will go to court.
MTN made a good-faith payment of US$250 million to the Nigerian government in February. Late last year it also made a provision of 9.29 billion rand (€542.04 million).
That provision was primarily responsible for the decline in MTN’s full-year EBITDA, which fell to ZAR59.13 billion from (€3.45 billion) from ZAR59.92 billion in 2014.
Revenue edged down year-on-year to ZAR147.06 billion from ZAR146.93 billion due to declining voice revenue in Nigeria and lower handset sales in South Africa, which itself was caused by a strike among MTN employees in the first half of 2015. Net profit fell to ZAR20.2 billion from ZAR32.08 billion.
"Notwithstanding the challenging operating environment, MTN continued to benefit from its significant scale and footprint," MTN said.
The telco’s subscriber base grew 4.1% year-on-year to 232.5 million, despite the disconnection of 6.7 million subscribers in Nigeria and 3.7 million subscribers in Uganda in order to comply with SIM-registration rules.
"Subscriber growth was achieved through attractive segmented below-the-line campaigns and an increased focus on the customer experience enabling the group to maintain its leadership position in 15 markets," MTN said.
MTN is present in 22 markets, but just two of them – South Africa and Nigeria – accounted for nearly 63% of group revenue in 2015.
"Management will continue to explore opportunities to address this over the medium term," MTN said.
