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South Africa-based telco group undertakes ‘deep and fundamental’ strategic review.
MTN on Friday said it has launched an in-depth strategic review, after swinging to a net loss during the first half of 2016 following the hefty fine incurred in Nigeria.
The South Africa-based telco group reported a loss of 5.49 billion rand (€359.21 million) for the six months to 30 June, compared to a year earlier profit of ZAR11.9 billion in the corresponding period a year earlier.
"The financial performance for the period reflects the confluence of a number of material issues, which created the ‘perfect storm’. The group has made strides towards resolving these challenges although many of these factors fall outside of its control," said MTN, in a statement.
In mid-June, MTN reached a final settlement with the Nigerian government on its fine, agreeing to pay 330 billion naira over three years, equating to US$1.67 billion at the official exchange rate at the time.
So far, MTN has paid off $374 million in the form of a $250 million good faith payment in February, before the final settlement was reached, and a first instalment of $124 million in June.
MTN said the fine wiped ZAR8.63 billion off its net income in the first half of 2016. It also hit the company’s EBITDA to the tune of ZAR10.5 billion, resulting in first half EBITDA falling by 38.4% year-on-year to ZAR18.89 billion.
Revenue jumped 14% year-on-year to ZAR78.88 billion thanks mainly to the appreciation of the naira versus the rand.
"Over the period, the average rand weakened against all our major revenue contributing currencies, declining 22.3% against the U.S. dollar and 18.5% against the naira," MTN said.
On an organic basis, revenue edged up 1.5% year-on-year. Outgoing voice revenue was down 5.4% organically, driven by customer disconnections related to subscriber registration rules in Nigeria, a 48-hour network outage in South Africa, and increased postpaid churn caused by intense competition. The fall in voice revenue was offset by a 19.7% year-on-year rise in data revenue.
Mobile subscriptions were broadly flat at 232.58 million. MTN said the performance was driven by 6.6 million disconnections in Nigeria, Uganda and Cameroon to comply with subscriber-registration rules.
"The group is in the process of undertaking, with external assistance, a deep and fundamental strategic review of its operations and processes to ensure it is operating far more optimally given the pressure on voice revenues, evolving customer needs for high-quality data and more complex and competitive market environments," MTN said.
As part of the review, the telco is setting up an analytics unit to provide better-targeted mobile tariffs in areas where there is strong demand for high-speed data. MTN will also focus on operating efficiencies, improving customer services, maximising the value of its infrastructure, and improving coordination between different parts of the business.
In addition, MTN will put new revenue streams, such as over-the-top (OTT) services, in a new division in a bid to improve flexibility.
The review "will reset and position the business for future growth in a rapidly evolving sector," MTN said.
