MTN results disappoint investors

Strong subscriber growth overshadowed by weaker than expected revenue and profit growth

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By  Roger Field Published  September 1, 2008

South African mobile operator MTN Group experienced revenue growth of 35% in its first half results to June 2008, while group subscribers were up by 53% to 74.1 million compared with the same period last year. Group earning before tax were up 29% to R19,6 billion ($2.54 billion).

MTN’s increase in revenue was mainly driven by its operations in South Africa and Nigeria, where revenues increased by 18% and 39% respectively.

Subscriber numbers in the group’s key market of Nigeria increased 12% to 18.6 million, although its market share dropped to 43% from 44% due to competition from the arrival of Kuwait's Zain. Irancell, MTN’s venture in Iran, increased its subscriber base by 93% to 11.6 million.

Average revenue per user (ARPU) marginally declined in most operations, consistent with the increased penetration into lower usage segments.

While growth in subscriber numbers outshone those from half year results in 2007, investors were disappointed by revenue growth and earnings before tax, which both turned in weaker growth compared with results from the same period last year.

Phuthuma Nhleko, president and CEO, MTN Group, said: “As the market becomes more competitive, we continue to explore ways of maximising our revenue and continue to provide reliable network services to consumers.

“The West and Central Africa, South and East Africa and MENA region have all been aggressively rolling out network in response to high demand, and continue to provide good network quality. The aggressive network roll out will continue throughout the course of this year,” he added.

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