Mobile data, competitive pricing lift MTN Group profits

By Gugu Lourie

MTN, Africa and Middle East’s largest mobile operator, overcame stiff competition and sharp decline in the oil price that impacted its large assets to post a 8.9% rise in 2014 full-year headline earnings per share (South Africa’s main profit gauge), boosted by a surge in mobile data growth.

The company, which is valued at more than R385 billion, said headline earnings per share rose 8.9% to 1 536 cents per share in the year to end-December 2014.

“The group continued to benefit from encouraging growth in non-voice revenue, driven by various data initiatives (including the Mobile Money offering) across key markets,” the company said on Wednesday.

MTN, which operates mobile phone networks in more than 20 countries, is fighting to keep market share from competitors such as India’s Bharti Airtel, British-based Vodafone, Millicom and Vodacom and overt-the-top players, which are fighting for a bigger slice of the telecoms market.

MTN has enough cash to pursue its digital strategy and compete aggressively with its rivals. By the end of the year, MTN was sitting on a R43 billion cash pile that could come in handy to develop new products and services to retain and attract new customers.

The company, which has put a ‘break’ on its expansion by acqusitions, said its total users grew 7,5% to 223,4 million.

MTN Group paid R20.5 billion dividend payout to shareholders during the year and as a result reported a net debt of R4.5 billion at the end of 2014 versus net debt of R352 million in 2013.

MTN continues to return a large chunks of money to its shareholders, as it fails to conclude a big-ticket acquisitions in Africa and elsewhere.

Seeking to create more shareholder value, MTN management under its boss Sifiso Dabengwa, will continue to evaluate shareholder returns through progressive dividend policy of growing dividends by between 5% and 15% a year, as well as buying back shares on an opportunistic basis.

MTN Group reported a 6.4% rise in revenue to R146 billion, due strong performance of its Nigerian operation that posted a 12.1% rise in revenues.

As MTN and its rival continue to diversify their revenue streams, the company said data services remain the key driver of the it’s revenue growth and increased their contribution by 3,8 percentage points to 18,7% of total revenue in 2014.

In 2014, the number of MTN Group data users rose by 22,8% to 101,2 million as it expanded its 3G and LTE networks and stimulated the adoption and usage of data-enabled devices and smartphones.

At the end of December, MTN Group had 51,9 million 3G-enabled devices on its network, an increase of 30,4% on the previous year

“We remain committed to creating a distinct customer experience through increasing our 3G and LTE coverage and improving network quality and capacity. This is of particular importance in South Africa where we will be extending our capex programme significantly,” the company said.

“To drive long-term sustainable growth across the Group, we will increase data revenue by encouraging uptake through increased smartphone penetration, competitive pricing, bundled services and increased speeds.”
International operations

In Iran, MTN saw its customers rise by 6,2% to 43,9 million and total revenue increased by 14,3%.

The company said the Iranian operation was awarded a 3G and LTE licence in August, which significantly enhanced data revenue in the fourth quarter.

MTN Irancell now has 17,3 million active smartphones on its network and 15,1 million data users.

In Nigeria, MTN grew its subscribers by 5,5% to 59,9 million. The number of smartphones on the network increased by 51,2% to 9,3 million at the end of

But MTN was concerned about some level of uncertainty in Nigeria with regards to the implications of the oil price and currency fluctuations, which may lead to slower economic growth. “This may result in some headwinds for the business in 2015,” the company said.

In South Africa, MTN said it expect to build on the positive momentum gained on revenue and subscriber additions in the second half of 2014. “The South African operation will also accelerate its immediate capex plans to support our medium-term growth prospects, particularly in the data area.”

In Syria, MTN has paid SYP25 billion for initial freehold 20-year licence which was acquired from January 2015 after it converted its build, operate and transfer licence. This was funded through MTN’s cash balances in Syria.

MTN’s footprint spans 22 countries across Africa and the Middle East, a far more extensive footprint than any of its rivals.


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