MTN, Africa and Middle East biggest mobile phone operator, reported disappointing Nigeria and South Africa subscriber growth as the company continues to feel the pressure of aggressive competition and stringent regulatory requirements.
The mobile phone group reported on Monday a 1.4% decline in the quarter for the period ending March 2016, impacted by the disconnections of subscribers in Nigeria related to the substantial subscriber registration process and compliance exercise.
The key market of Nigeria had the biggest drop with a 6.9% decline in subscribers to 57 million customers. MTN attributed the downshift in Nigeria, in part, to the disconnection of 4, 5 million subscribers in February 2016 related to the registration compliance process.
MTN South Africa saw a 1.7% drop in customers to 30.1 million subscribers, hard hit by seasonality and the alignment of the subscriber base recently acquired from Autopage Cellular.
“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,” said MTN Group executive chairman, Phuthuma Nhleko.
“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 first quarter 2016. 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”
The company added that subscriber growth 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.
The key market of Iran saw a 1% rise in subscribers to 46.6 million and constant currency data revenue increased by 70, 9% and contributed 39,3% to total revenue.
“This was largely supported by continued network modernisation as well as the rollout of 1 368 3G and 743 LTE sites during the quarter. Local currency ARPU decreased by 1,4%,” the company said.
MTN Syria, MTN Yemen and MTN Afghanistan remain profitable, however, they continue to operate in highly challenging environments impacting the region’s subscriber growth.
MTN had 229 million people connected to its network in 22 countries across Africa and the Middle East in the quarter to end-March 2016.
“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,” said Nhleko.