Africa’s biggest mobile carrier, MTN, has posted first quarter financial results showing it increased its group subscriber base, signing up 6.6 million new customers.

However, South African operations remain under pressure, facing a myriad of challenges that have narrowed growth prospects.

In the quarter, the company also added 2.9 million active data users across its operations on the continent.

The telco, which has been seeking to reposition itself and push into new sources of revenue, also recorded increased uptake of its fintech business, which includes Mobile Money (MoMo), insurance, airtime lending and e-commerce.

MTN recorded voice, data and fintech revenue growth of 6.3%, 26.4% and 26%, respectively, in the quarter.

MoMo added 400 000 new subscribers and MTN says it accelerated its MoMo agency network in Nigeria, under its super-agent licence, adding 70 000 agents in the first quarter, bringing the total number of registered agents to 178 000.

The telco’s digital business also returned to growth, with a 15.6% surge in the same period.

MTN, which has a footprint in 22 countries, says it had an overall solid performance for the period under review, increasing service revenue by 11.1% and EBITDA by 15.6%, with the EBITDA margin improving by 2.1pp to 43.2%, in line with its medium-term targets.

SA’s slow growth

In SA, the company says its performance was negatively impacted by the wholesale business, as it continues to account for Cell C roaming revenue on a cash basis, as well as the loss of revenue from the Telkom roaming agreement which came to an end in June 2019.

MTN says service revenue declined by 6.2%, owing largely to a sharp reduction in wholesale revenue resulting from the effects of a change to cash accounting for Cell C roaming revenue and the loss of the Telkom roaming agreement.

“If we adjust the numbers by removing national roaming (both Cell C and Telkom), then overall Q1 service revenue for MTN SA would have been flat, highlighting the progress made in the underlying business. The momentum in overall data revenue in MTN SA has also been pleasing and grew by 7.1%, supported by a 53% year-on-year (YOY) increase in traffic.”

In the first quarter, MTN SA recorded a slight increase in total subscribers by 75 000 quarter-on-quarter to end the quarter with a base of 29 million.

“The overall first quarter performance was impacted by a challenging trading environment brought about by weak macro-economic conditions, compounded by the global outbreak of the COVID-19 pandemic, currency depreciation and load-shedding,” says MTN.

However, the telco says its consumer prepaid business in SA continued on its improving trajectory, with service revenue coming in flat YOY, compared to a decline of 4.1% in 2019.

“The performance of the business remained affected by the base effects of ICASA’s end-user subscriber regulations, with out-of-bundle data revenue still included in the first two months of the prior period before the new regulations took effect from 1 March 2019.

“There was encouraging momentum in prepaid data revenue, which increased by 3.3% YOY. This was driven by a 31% increase in prepaid data traffic following a slight decline of 0.7% in 2019.”

COVID-19 effects

Turning to the impact of COVID-19 on the business, MTN says in these difficult times it will continue to focus on its key priorities: “Looking after our people, our customers and our networks while we focus on efficiencies.”

CEO Rob Shuter explains: “The effects of the COVID-19 pandemic on the global economy have brought about unprecedented uncertainty, volatility and challenges which are impacting our markets at both the socio-economic and macro-economic levels.

“The impact of the pandemic on our quarter one performance was not significant as lockdown restrictions for our consolidated subsidiaries were only implemented from the last week of March 2020.”

Shuter notes the immediate priority is the well-being of employees, their health and safety.

“For our customers, we have ramped up our digital channels as a service alternative to enable them to continue purchasing airtime and accessing our products and services seamlessly as well as launching Y’ello Hope Packages in most of our markets. Our various initiatives support governments across our markets with communication systems and connectivity as we do our part to help minimise the economic and social impact.”

Shuter says MTN will maintain its medium-term guidance and will update the market in the future of any changes in that regard.

“The group remains committed to delivering on its strategy, including delivering on our asset realisation programme, which aims to simplify our portfolio, reduce risk, improve returns and realise capital of at least a further R25 billion over the medium-term.

“On strategic progress, the digital business returned to growth, booking 15.6% in the quarter. In MTN SA, the enterprise business recorded its second quarter of growth, and in May, we commenced phase two of the national roaming agreement with Cell C and look forward to a continued partnership.”