MTN SA’s prepaid service revenue down 5.1%

JOHANNESBURG – The recent Independent Communications Authority of South Africa (Icasa) regulations for out-of-data bundles has hit MTN South Africa’s service revenue in the quarter to March, the company said yesterday as it prepares to list its Nigeria unit in Lagos later this month.

MTN South Africa’s prepaid service revenue fell by 5.1 percent on out-of-bundle price reductions and a challenging economic environment, the company said as it released its quarterly update yesterday.

“As previously communicated, we expect that prepaid service revenue will remain under pressure for a few quarters, before we see recharge resilience and changes in customer behaviour drive up in-bundle service revenue,” the company said.

Icasa’s regulations require that there will be no automatic rolling over to out-of-bundle data charges when bundles run out.

Users will be allowed to proactively opt in to out-of-bundle data charges in order to stay connected, even if airtime is available or they are on a contract.

Last month MTN and competitor Vodacom received flak from the Competition Commission, which accused them of charging higher data prices in South Africa than they do in other markets.

The company said it would submit its response to the findings and recommendations of the Competition Commission in its data services market inquiry next month.

“We remain of the view that significant reductions in data pricing have already been implemented subsequent to the data analysed in the report, that the urgent release of high demand spectrum will result in lower cost of data services, and that there is a viable wholesale market that enables smaller operators and mobile virtual network operator to provide compelling propositions to their customers,” the company said.

Service revenue in South Africa grew by 4.6 percent in the quarter.

However, MTN lost 1.2 million South African subscribers in the quarter under review to 30 million from 31.2 million at the end of December.

Prepaid subscribers fell to 24.1 million in the March quarter from 25.3 million at the end of the December quarter.

MTN Group chief executive Rob Shuter said the company had met its medium-term revenue growth target by delivering 10 percent year-on-year growth led by strong operational performance in South Africa, Nigeria and Ghana.

“We are encouraged by the operational progress we continue to see across the business, supported by the network roll-out we achieved and enhancements to the propositions that we offer to our customers. In South Africa, we implemented changed pricing for pre-paid propositions where we reduced, materially the out-of-bundle tariffs, making data services more affordable.”

Peter Takaendesa, a portfolio manager at Cape Town-based Mergence Investment Managers, said yesterday that results were a mixed bag.

“MTN managed to offset the weaker service revenue in South Africa helped by the contribution of roaming traffic from Cell C,” he said. Cell C customers are roaming on MTN’s 3G and 4G/LTE networks after Cell C implemented its roaming agreement with MTN South Africa last year.

MTN shares closed 2.93 percent lower at R100.42 on the JSE on Thursday.

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