Telecommunications giant MTN aimed to roll out third-generation (3G) technologies across Iran, despite the millions of dollars the mobile operator was unable to unlock from its largest Middle East market.

MTN’s Iranian joint venture partner Irancell Telecommunications last week successfully upgraded its licence agreement with the Communications Regulatory Authority in Iran to include 3G mobile broadband and higher standards, such as fourth-generation.

MTN Irancell would start the roll-out of a 3G network with long-term-evolution-capable frequency during the second half of this year, following approval by the Communications Regulatory Authority.

The group reported that 2 146 3G sites were already set to launch, to complement the 274 new second-generation sites rolled out during the first half of the year.

The licence conversion also allowed MTN to obtain access to additional spectrum frequency for an amount of IR3-trillion (about R1.2-billion) - payable by March 2015 in four tranches funded by the local operation.

MTN, which owns 49% of MTN Irancell, has been unable to repatriate about $400-million – $900-million including dividends and loans – from its Iranian unit in the sanction-hit country, group president and CEO Sifiso Dabengwa said on Thursday.

The group continued discussions with the Iranian government, the Iran Central Bank and the US Treasury’s Office of Foreign Assets Control to “find a way of” unlocking the funds within the next four months.

A partial easing of sanctions saw MTN secure the release of some funds, but investigations and due diligence to find a permanent suitable solution were continuing.

MTN also had about $250-million tied up in Syria. However, these funds would be used to pay for its SYP18-billion (R129-million) to and SYP25-billion (R179-million) conversion from a build, operate and transfer contract to a freehold licence, which was expected before the end of 2014.

Meanwhile, despite the ongoing sanctions in Iran, Irancell managed to increase its revenue and hike its subscriber base during the six months ended June 30.

Revenue from the Iran-based operations increased to R5.66-billion during the six months under review, a 13.8% rise on the comparative period the year before.

MTN Irancell’s earnings before interest, tax, depreciation and amortisation (Ebitda) margin declined 0.2 percentage points to 44.4%, while Ebitda increased from R1.9-billion in the first half of last year to R2.5-billion in the six-month period under review.

The group also recorded a 1.5-million increase in net additions to 42.7-million subscribers during the six months. Irancell expected to add a total of 2.5-million new subscribers for the full year.

At the end of June, MTN Irancell had 13-million active smartphones on its network and 12.6-million data users, with data revenue jumping 110% as average data consumed increased 93.1% to 66 MB a subscriber.

The company, which had authorised nearly R3-billion in capital expenditure for the year, had injected R891-million into the operation during the first half of the year.

SOUTH AFRICA FALLS FLAT
Meanwhile, the group had downgraded its subscriber additions guidance for MTN South Africa for the full year from 2-million to 1.5-million, as the local unit continued to battle intense competition.

MTN South Africa reported a 1.5 percentage point decline in Ebitda to 33.3% owing to a decline in revenue and an impairment relating to passive infrastructure of R172-million. 

During the first half of 2014, revenue fell 7% to R19-billion, with interconnect revenue plunging 30.4% on the back of the mobile termination rates reduction that became effective in April.

MTN’s South African market share contracted 2.7 percentage points to 31.9% as competition intensified in the prepaid segment.

However, data revenue increased 13.7% to R4.4-billion, contributing 23.4% to total revenue.

During the first quarter of 2014, the local operation’s subscriber base contracted by 825 000 subscribers, offset by the addition of 394 000 subscribers during the second quarter to reach 25.3-million subscribers by the end of June.

“We expect a return to normalised growth in revenue and subscribers over the next six months,” Dabengwa assured shareholders on Thursday at the company’s results presentation in Roodepoort.

By the end of July, another 400 000 subscribers were added, indicating continued traction in MTN South Africa’s recovery.

“The improvement in subscriber growth is largely a result of focused and targeted promotions to the prepaid segment, which included the introduction of the widely successful 79c a minute price plan,” he explained.

Several other voice and data bundle promotions were rolled out during the second quarter, which led to a 33.5% growth in prepaid traffic on the network.

The number of data users in South Africa increased 2.7% to 14.7-million, with 5.3-million active smartphones on MTN’s network by the end of June.

GROUP PERFORMANCE
MTN Group deliver a 9% rise in headline earnings a share to 729c during the six months ended June.

Ebitda increased 19.6% to R33.6-billion, while the group’s overall Ebitda margin widened 3.5 percentage points to 46.3%.

“The upward trend in the group’s Ebitda margin was supported by increased margins in Nigeria (1.9 percentage points), Syria (2.4 percentage points) and Sudan (3.5 percentage points),” Dabengwa commented.

MTN registered group revenue of R72.7-billion, a 10.7% rise on the prior corresponding period, while the group expanded its subscriber based by 3.5% to 215-million.

Data revenue increased 38.9% to R12.7-billion, with Nigeria and South Africa accounting for 70.9% of the total.

MTN declared an interim dividend of 445c a share for the six months.