MTN posts first loss in 20 years

MTN Uganda revenues dip to Shs1.5tn due to stiffer competition, regulation

Photo: Edgar R Batte

MTN Group reported an annual loss of 3.1bn rand ($237.15 million), its first in two decades, with most of the pain coming from a regulatory fine in Nigeria, a key market, sluggish performance in its South African home market, and the impairment of assets in South Sudan.

The group also reported a headline loss per share of $0.77 in what the filing described as “the most challenging year in the company’s 22-year history”.

MTN Uganda’s Earnings before interest, tax, depreciation and amortisation (EBITDA) fell slightly in 2016 to Shs442 billion on the back of stronger competition and a tougher regulatory environment that led to the switching off of unregistered SIM-cards, according to the financial results.

The EBITDA was lower than the Shs485 billion reported in 2015, according to filings by the Johannesburg Stock Exchange-listed MTN Group.

The filing did not show net income for MTN Uganda but industry watchers say it is expected to dip below the Shs177 billion the company made in 2015 (2014: Shs229 billion, 2013: 203 billion).

MTN Uganda, which is the largest telecommunications company in the country, increased its subscriber base by 18.1% to 10.5 million as it aggressively sought to reconnect customers debarred from the network in Q3 and Q4 2015 over unregistered SIM cards.

“The performance was supported by new acquisitions on the all-net call per second price plan, segmented value propositions and a decline in churn. Market share grew to 53.3% from 51.1%,” the parent group said in its filings.

Total revenue declined by 1.9% on the back of lower voice revenues depressed by the customer disconnections and the One Network Area in the East African Community where calls between member states are billed as local calls.

The slow-down in voice revenue, which was seen in earlier reporting periods, was arrested by an increase in data revenue, which grew 18.8% to contribute to 34% of revenue. Digital revenue from mobile financial services, mobile advertising and MTN Class, an educational product, contributed 71% to overall data revenues.

MTN Uganda’s overall revenues were Shs1.5 trillion, with Shs509 billion attributable to revenue from data, reflecting the growing importance of non-voice revenues for the telecom.

Similarly, financial services are an increasingly important part of the business and active MTN Mobile Money customers increased 12.4% to 4.1 million. The introduction of MoKash, a mobile phone-based borrowing and savings product run in conjunction with CBA Bank pushed uptake, with about a million subscribers joining the product in its first five months.

About 140,000 loans had been given out under MoKash by the end of December, less than six months after the scheme started.

MTN Uganda’s EBITDA margin fell 4.9% to 29.6% weighed down, the company said, by one-off subscriber registration costs, an inventory impairment charge as well as higher maintenance and tower leasing costs.

Capital expenditure slowed by 23.7% as the company sought to sweat existing assets.

In the filing MTN Uganda also revealed that it had converted $48.3 million of a variable interest loan to its associate, Uganda Tower Interco B.V., into additional equity, with the rest being converted into a fixed-rate, Uganda shilling denominated loan. The company, which his registered in The Netherlands, owns and operates communication towers and is a subsidiary of the American Tower Corporation, which bought off MTN Uganda’s masts.

Data revenue for MTN Group was up 16.7% while voice traffic fell by 1.7%, the company said.

Data adds to MTN Uganda profit as voice calls slow