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Telecommunications giant MTN got off to a shaky start to the year, as events towards the end of 2015 hit first-quarter subscriber numbers and pushed the group to take a “back-to-basics” approach to get back on track.
MTN last year took an earnings hit on the back of operational challenges, regulatory pressure and a hefty pending penalty in Nigeria, which was exacerbated by weak macroeconomic conditions and increased market competition.
“During the first quarter of 2016, the group was impacted by the aftershocks 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,” explained MTN group executive chairperson Phuthuma Nhleko on Thursday.
The JSE-listed firm had undertaken a number of “back to the basics” structural and operational initiatives that would “hopefully” reset and position it for future growth in a rapidly evolving sector.
During the three months to March 31, group subscribers decreased 1.4% quarter-on-quarter to 229-million owing to disconnections of subscribers in Nigeria related to a substantial subscriber registration process and compliance exercise.
MTN Nigeria’s competitiveness in the market was compromised by the suspension of regulatory services in October and a $5.1-billion fine, later reduced to $3.9-billion, from the Nigerian Communication Commission for the late disconnection of about 5.1-million subscribers whose registration documents were considered incomplete.
During the first quarter of this year, MTN Nigeria’s subscriber base decreased 6.9% quarter-on-quarter to 57-million after the disconnection of 4.5-million subscribers in February.
“To mitigate any future regulatory challenges, MTN took an exceptionally conservative stance by disconnecting all subscribers who could possibly be deemed to be noncompliant. This has had a significant unfavourable impact on total subscriber growth and revenue in the first quarter of 2016,” Nhleko said.
However, he believed the move to resolve the compliance matters decisively had placed MTN on a more solid regulatory footing and registration process.
MTN Nigeria would now focus on reconnecting subscribers through proactive engagement and “win back offers”.
Meanwhile, MTN’s South African subscriber base declined 1.7% to 30.1-million owing to seasonality and the alignment of the subscriber base recently acquired from Autopage.
“MTN South Africa’s performance was encouraging despite a marginal decline in subscriber growth,” Nhleko said.
In addition to seasonality, quarterly average revenue per user was impacted by a 48-hour network outage in February, which shaved some 3% off the group’s revenue for the month. However, during March, MTN delivered a 10.3% month-on-month increase in revenue.
The group’s new operational structure comprised South and East Africa, or SEA, which incorporated South Africa, Uganda, Zambia and Rwanda, along with joint ventures in Botswana and Swaziland; and West and Central Africa, or WECA, which comprised Nigeria, Ghana, Cameroon, Côte d'Ivoire, Benin, Congo-Brazzaville, Liberia, Guinea-Conakry and Guinea-Bissau.
The Middle East and North Africa, or MENA, region included Iran, Syria, Sudan, Yemen, Afghanistan, Cyprus and South Sudan.