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MTN releases mid-year financial results

According to the MTN Group, it has reached satisfactory financial results for the six month period ended 30 June 2009 amid the economic downturn. The group's reported revenue and EBITDA results, when compared to the prior six month period ended 30 June, were not materially impacted by movements in currencies in the majority of countries in which it operates against the ZAR.
However growth in earnings was negatively impacted by functional currency losses of R2,8 billion (June 2008: R0,9 million gain) on shareholder loans, receivables and cash.


MTN's network expansion and capacity investment strategy initiated in 2008 also apparently supported the strong performance of the group's subsidiaries, particularly where competitors elected to scale back on investments. Mtn believes that the enhanced distribution channels and attractive value propositions also contributed to its positive performance.


The group's mobile subscriber base passed the 100 million milestone during the reported period to reach 103,2 million subscribers at 30 June 2009. This is a 14% increase since 31 December 2008. Subscribers have increased by 39% since 30 June 2008.


The group reports its performance by region, namely South and East Africa (SEA), West and Central Africa (WECA) and the Middle East and North Africa (MENA). MTN consolidates 49% of MTN Irancell's financials.


MTN Group president and CEO Phuthuma Nhleko said: “Notwithstanding the economic downturn, this is a satisfactory set of results achieved through the successful execution of our operating strategy which is underpinned by sound a business model of strategic investment choices, strong corporate governance and effective management across MTN's global footprint.”


On prospects, Nhleko said: “While many of our markets remain relatively vulnerable to the global economic downturn, there are some indications that conditions may be starting a slow recovery. Competition across MTN's footprint is likely to continue to increase”. But, he said, MTN remains focused on:



    * actively seeking value-accretive expansion opportunities in emerging markets;
    * tightly monitoring infrastructure investments to ensure appropriate levels of capacity and quality of service for an enlarged market;
    * optimising efficiencies in maintaining and improving our competitive position while ensuring the Group is able to benefit from a rapidly converging technology market, and continued investment in sub-marine cables for efficient access;
    * continuing engagement with regulatory authorities in the development and refinement of the telecommunication sector; and
    * the implementation of MTN's proposed BEE deal at the appropriate time.


 


South Africa


MTN South Africa's subscriber base grew by 62,000 during the review period to 17,2 million. The disappointing increase in subscribers, according to MTN was due to a combination of factors including challenges on the network and supporting systems, slowing GDP growth, pressure on consumer spend, and competitor activity in the first half of the year.


Postpaid subscribers grew by 4% to 2,9 million for the six-month period. The postpaid market has had a challenging six months, says MTN, with economic pressure affecting growth in the market and generally putting a squeeze on credit. Growth was mainly attributable to MTN Anytime, which currently makes up 39% of the postpaid base.


The prepaid subscriber base declined by 52,000 during the period. ARPU in the prepaid and postpaid market segments declined by 5% to R92 and 10% to R362 respectively.


The proposed Musica transaction has been terminated as certain legal conditions precedent, beyond the control of the parties, could not be met. The iTalk acquisition was finalised in January 2009. The branded channel incorporates eight stores that will be integrated under the MTN brand. MTN South Africa plans to maintain its focus on distribution.


MTN South Africa also continues to invest in its network (radio, core and transmission). The Gauteng southern fibre network ring to interconnect the main switching and data centres has been completed. Further trenching is under way to complete the Gauteng northern ring which incorporates Pretoria. The 5,000km national fibre optic network tri-build agreement has been finalised. The trenching route between Gauteng and the Durban route has begun.


The operation has rolled out 234 second-generation (2G) and 307 third-generation (3G) base transceiver stations (BTSs) since the beginning of 2009, enabling it to increase circuit switch data capacity by 8.5% and packet switch data by 80% respectively. The 3G population coverage increased from 35% in December 2008 to 44% at the half year.


Nigeria


MTN Nigeria subscribers grew by 19% over the six months to 27.3 million at June 2009. MTN Nigeria recorded strong growth in the first half and improved market share to 48%. Significant investment in network capacity and improved quality of service strategies adopted in 2008 and 2009, according to the company, gave MTN Nigeria an advantage over its competitors for the period. The operation successfully restructured its sales and distribution strategy to improve the focus of the dealer channel and drive acquisitions.


APRU declined by US$4 from December 2008 to US$12. Although the USD ARPU shows a considerable decline following the depreciation of the Naira against the US dollar, local-currency ARPU declined at a slower rate and in line with increased penetration in lower-use segments.


Aggressive network rollout continued in the first half of 2009, as MTN Nigeria rolled out 426 2G and 236 3G BTSs. The 3G rollout is gaining momentum with 787 3G BTSs now live and the completion of phase 2 of the 3G rollout underway. A further 1,548km of transmission expansion to improve the network is in progress (66.42% complete).


Ghana


MTN Ghana increased subscribers by 12% over the six months to 7.2 million at 30 June 2009. Market share only reduced slightly from 55% to 54% over the period despite fierce competition from new market entrants. The launch of a loyalty programme, Rally Around the Flag, and the continued success of MTN Zone assisted with subscriber retention.


ARPU decreased by 33% from US$12 to US$8 mostly due to the devaluation of the Cedi against the US dollar. Local-currency ARPU decreased by 15% after aggressive price offers by new competitors and deeper penetration into the market.


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