Government move to stop telcos from selling SIM cards through agents could hurt the company’s revenue going forward
Kampala, Uganda | ISAAC KHISA | MTN’s subsidiary in Uganda has recorded a surge in revenue for the year ended December 2017 amidst a sharp fall in subscriber base.
The full year performance results released on March 08 shows that MTN Uganda recorded a 10.7% growth in revenue to Shs 1.68 trillion (5, 465milllion rand) last year from Shs 1.5trilion in 2016 and Shs1.53 trillion in 2015supported by growth in demand for data and digital services.
“Data revenue increased by 41.4% underpinned by an increase in data traffic and good growth in data bundle adoption,” the company states in its annual financial report. “Digital revenue increased by 16.1% supported mainly by Mobile Financial Services (MFS).”
MFS contributed 23% of the company’s total revenue, with the mobile money customers increasing by 27.6% to 5.2million.
However, the company ended the year with 10.7milliom subscribers down from 11.2million in the previous year citing regulatory related disconnections.
This implies that MTN has 700,000 more customer subscribers compared with its closest rival, Airtel that has 10million in a market of about 23million customers shared among the seven telecom firms.
This new development coincides with the decision by the country’s largest telecom firms including MTN to temporarilyhalt the sale of new SIM cards to customers until they get direct access to the National Identification and Registration Authority (NIRA) database.
This is in response to the government’s move, through the Uganda Communication Commission, to cease the sale of SIM cards through hawkers, street vendors, street agents and any other establishments that are not licensed by Kampala Capital City Authority (KCCA) or other municipal and town authorities as a measure to curb crime.
At group level, MTN, which also operates in more than 20 countries in Africa and the Middle East, recorded a Shs 1.04trillion (3.3 billion rand) profit last year, excluding one-off charges related to a $1.1 billion Nigerian fine. It had reported a 1.4 billion rand loss a year earlier.
Group service revenue rose 7.2% to Shs38.19 trillion (124 billion rand), due to strong performance in Nigeria, the company’s most lucrative where it has also been embroiled in a dispute over repatriating funds and unregistered SIM cards.
The Nigerian Senate approved in November a report largely exonerating MTN of illegally repatriating $14 billion. The report followed MTN’s agreement to pay a $1.1 billion fine to settle a row over unregistered SIM cards.
MTN Ghana, MTN Ivory Coast and MTN South Africa also contributed positively to the group’s top-line growth on a constant currency basis.
Rob Shuter, the Group President and Chief Executive Officer, said MTN delivered a solid overall performance for the year, with progress on many fronts, despite difficult economic conditions as well as operational and regulatory challenges in certain markets.
He said, for instance, that MTN Nigeria showed strong constant currency revenue growth and MTN South Africa’s post-paid business displayed encouraging improvements.
“The group’s top-line growth was driven by robust growth in data revenue (on a constant currency basis), supported by the combination of improving customer service and more stable and competitive networks,” he said.
“MTN Mobile Money and rich-media services supported growth in digital revenue, however, this slowed in the second half as we optimised our value-added services (VAS) subscription business.”
The Group’s data revenue increased by 34.2%, supported by improved quality and capacity of data networks in key markets while digital revenue increased by 14, 2%, driven mainly by MFS.
With a subscriber base of 217 million customers across its operations, the MTN Group added 5.7million mobile money customers during the year.
Shuter said the telecom firm strengthenedits management structures and specialist skill capabilities to drive operational execution and to support its risk management processes.
“We are confident that the foundation is in place for MTN to deliver strong growth over the medium term. Through the continued execution of our BRIGHT strategy we anticipate improved top-line and earnings before interest, taxes, depreciation and amortization(EBITDA) growth supporting acceleration in cash flows and improving returns over the medium term,” he said.
BRIGHT strategy is MTN’s new strategy unveiled last year arranged under six pillars comprising: Best customer experience; Returns and efficiency focus; Ignite commercial performance; Growth through data and digital; Hearts and minds; and Technology excellence.