A more than 10% subscriber jump in Nigeria, MTN’s largest market, during the first half of 2020 hints at strong subscriber growth for the group overall, offsetting likely losses in the SA market.
Nigeria contributes a third of MTN’s earnings. The subsidiary grew subscriber numbers by 6.8-million to 71.1-million in the six months to June.
Recent results from SA mobile operators show that subscriber numbers are coming down for most players.
MTN SA lost about 2-million customers at the end of the last financial year, while Cell C reported that it lost about the same number in March. Last week, Vodacom said it lost close to 10% (4-million) of its subscriber base in the most severe months of lockdown in SA. The only one still seeing some growth in the local market is Telkom.
MTN Group’s geographic spread across 21 markets may be its saving grace in the race to acquire more customers.
Unum Capital portfolio manager Henk Lindeque does not believe that MTN will be affected in the same way, as it “does not operate in all of the same markets that Vodacom operates in”.
In a recent trading statement, MTN, which has a market capitalisation of R115.8bn, made no mention of subscribers, but Herenya Capital Advisors founder Petri Redelinghuys said its “exposure to less mature markets means subscriber numbers should still be increasing at a reasonable pace”.
With subscriber growth already reported in Nigeria, performance from operations in SA and Ghana are likely to have a big impact on the overall trend.
On Thursday, MTN Nigeria said the Covid-19 pandemic weighed on profits in its six months to end-June, though data revenue and traffic surged.
Service revenue increased 12.6% to 637-billion naira (R27.4bn), with the group reporting a decline in demand for voice services, while the pandemic also slowed its rollout of additional coverage.
Profit before tax fell 2% to 139.6-billion naira due to increased costs.
“Following a strong first quarter, we experienced a challenging operating environment in the second quarter characterised by Covid-19-induced lockdowns and the broader macroeconomic impact it has had,” MTN Nigeria CEO Ferdi Moolman said.
“We prioritised the upgrade of our network capacity to accommodate growth in traffic, while continuing to expand 4G network coverage, albeit at a slower pace given the constraints presented by Covid-19,” he said.
MTN said in a trading update last week that headline earnings per share (Heps) for the six months to June are expected to be at least 100% higher than the 195c previously. Heps is the main profit measure in SA and strips out certain one-off items to give a better indication of the underlying performance of a business.
The group’s share lost 5.75% to R60.63.
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