MTN says Nigeria, its largest revenue earner, lost close to 7% of its subscribers in the first quarter as a result of new regulations on the sale and activation of SIM cards, slowing down the company’s growth momentum.
In April, Nigeria’s telecommunications regulator lifted a freeze on the registration of new subscribers by telecom operators, including MTN, that had been in place since December as the country approved new SIM guidelines.
In 2020, the Nigerian Communications Commission, which was conducting an audit of mobile users, ordered the country’s network operators to suspend the sale and activation of new SIM cards. The regulator gave mobile operators until the end of December to update SIM registration records. After that, all SIMs without a valid national identification number (NIN) were to be blocked from the networks.
As a result, the Johannesburg-based MTN group said customers declined to 71.5-million “due to the effects of customer churn and the regulatory restrictions on new SIM sales and activations” in the first quarter of 2021.
MTN is the West African country’s largest mobile operator, having rapidly grown its customer base since launching in 1998, competing with firms such as Airtel, Globacom and 9Mobile.
The company said potential lost revenue from the loss of subscribers had been offset by increased voice and data usage by existing customers.
With the ban now lifted, Karl Toriola, MTN Nigeria’s CEO, told shareholders that the initial rate of addition for new subscribers may be slower than usual due to new processing requirements, system limitations and the reduction of qualified locations for SIM registration.
“While this may impact the rate of additions in the short term, we are optimistic that the current processes under way will entrench a more robust and sustainable registration process as we reaccelerate subscriber growth over the medium term,” he said.
During the period, service revenue increased 17.2% to NGN385.2bn (R13.6bn) while active data users declined by 71,000 to 32.5-million. Despite that decline, the company saw an 86.7% increase in data traffic and a 48.5% increase in usage — megabytes per user — from existing customers, which was helped by the recent acquisition of new radio frequency spectrum in Nigeria.
Earnings before interest, tax, depreciation and amortisation (ebitda) grew 19.1% to N204.5bn, with the ebitda margin increasing 53.1%, up 0.9%. Profit before tax grew 33.9% to N102.9bn.
Earnings per share rose by 42.5% to N3.60 kobo.
Revenue from fintech, a big area of investment for the group, rose 28.5%, driven by increased adoption of mobile money services. “We continue to expand our MoMo agent network and broaden our service offerings to include assisted withdrawal irrespective of the bank where the account is domiciled.”
MTN Nigeria now has a network of 449,146 registered mobile money agents, having added 54,000 during the period, with 4.6-million active customers.
Capital expenditure was up 19.3% to N89.9bn, driven by the rollout of new network tower sites.
Toriola said “our 2021 priorities remain unchanged, with a clear focus on sustaining double-digit revenue growth, driving 4G network expansion and positioning our fintech business for accelerated growth in order to unlock its full value”.
He said the acquisition of an additional 800MHz of spectrum “positions us to deliver improved service speeds to Nigerians’ support of the government’s broadband initiative”.
MTN Nigeria and other phone companies have been at odds with the country’s banks for using telecommunication platforms to provide payment services. The fight at one point resulted in a group of banks stopping the sale of airtime and other mobile services through its channels as players on both sides squabbled about the commissions to be paid on these transactions.
Toriola said they “remain in dialogue” with the banks “on a pricing option for airtime sales commission while diversifying our airtime recharge channels to offer our subscribers more options to purchase airtime and stay connected”.
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