MTN records 68.0% loss on digital revenue in Q1 2019

Coming in succession of two consistent down returns, this was disclosed to our Correspondent quoted in its unaudited financial result for the quarter ended March 31, 2019.

It should be recalled that, the Nigerian group (MTN Nigeria) earlier reported a similar digital revenue decrease of 23.5% and 58.1% in Q3 and Q4, 2018 respectively.

However, in Q3 2018, the group blamed the digital revenue decreased on the the continued optimisation of its Value  Added Services (VAS).

Earlier while delivering the Q3, 2018 financial year report, MTN Group president/Chief Executive Office, Rob Shuter said the loss was expected to continue to the next quarter due to expected low VAS revenue earnings.

According to Nigerian Communications Commission (NCC),  VAS enables mobile network operators to develop additional revenue streams and can be used in any service industry for services available at little or no cost to promote their primary business.

 “Today, the Value Added Services segment of the telecom industry is valued at $220 million per annum. This is estimated to grow to $500 million in the next five years,” NCC EVC noted.

Nevertheless, MTN Nigeria in its Q1 2019 has experienced significant number of increased revenue and growth in other areas.

Among many others, the reports shows Service revenue increased by 13.4%;

Voice revenue increased by 12.7%;

Data revenue increased by 32.4%;

Digital revenue decreased by 68.0%;

Fintech revenue increased by 22.9%;

EBITDA margin increased by 11.5pp to 53.3% (IAS 17: 44.2%) and Mobile subscribers increased by 2.1 million to 60.3 million.

Commenting on the results,  the CEO, MTN Nigeria, Ferdi Moolman said “Our first quarter performance was in line with expectations, as service revenue remained resilient with double digit growth on the back of improvements in voice and data revenues.

“We connected a further 2.1 million people to our network, providing them access to worldwide communication services, while additional 1.7 million people are able to access the possibilities that the internet provides.

“This growth is built on our focus on customer centric delivery and in particular on improved customer retention, our continuous focus on value for money propositions and further network roll-out and enhancement.

“Q1 2019 saw a significant increase in our capital expenditure programme, with focus on LTE services, where we rolled out 1,188 sites across our key focus cities.

“In addition, the successful transfer of our 800MHz spectrum from Visafone to MTN Nigeria will further enable improvements to network coverage and service quality.

“We have made significant progress to list on The Nigerian Stock Exchange (NSE) following the conversion of MTN Nigeria to a public company and the successful registration of our ordinary shares with the Securities and Exchange Commission (SEC). We are now engaging with the NSE to complete the listing process.

“The business is on a sustainable growth path with service revenue increasing by 13.4% YoY, in line with our medium-term guidance of double-digit growth.

“This was led by a 32.4% increase in data revenue and a 12.7% increase in voice revenue, a general slowdown in economic activities during the election period, impacted voice revenue growth.

“Growth in data revenue was supported by a 10.6 percentage point increase in smartphone penetration, improved network quality and a 9.1% increase in active data subscribers to 20.4 million. Total subscribers increased by 3.6% QoQ to 60.3 million.

“We recorded EBITDA margin of 53.3%. On an IAS 17 basis, the margin increased to 44.2%, up 2.4 percentage points YoY, driven by the growth in revenue and effective cost management”,  Moolman explained.