MTN grows subscriber base 22% to 141.6 million in 2010; revenues increase 3%

Mergers, Acquisitions and Financial Results

MTN saw a 22% increase in subscribers, to 141.6 million, for the year ended 31 December.

The company says it enjoyed a “satisfactory operational performance” for the year, despite being negatively impacted by the strong rand.

“Economies across our footprint have emerged relatively strongly from the challenges of the global financial crisis of 2008. The commodity cycle upswing, together with continued infrastructure investment and improved governance, helped maintain a positive trading momentum.”

On a constant currency basis, revenue grew by 14%. “However, due to the continued strengthening of the rand, reported revenue at R114.7 billion was 2.5% higher than the prior year.”

MTN says this is because 68% of its revenue is generated in currencies other than the rand.

“Regulation of mobile termination rates, mainly in SA and Nigeria, resulted in a decline of 13% in interconnect revenue, while data revenue, including SMS and MTN Business Solutions, increased by 33%, albeit off a low base and notwithstanding the impact of the rand.”

The company says the year saw a 23% increase in earnings before interest, tax, depreciation and amortisation (EBITDA), on a constant-currency basis.

“The strong rand, however, meant the increase in reported EBITDA was 9.7%. The decrease in costs in the year was mainly due to the decrease in interconnect costs, together with a reduction in selling, distribution and marketing costs.”

Net finance costs decreased by 29.5%, to R4.1 billion in 2010, from R5.8 billion the previous year. This was mainly due to a 61.8% reduction in functional currency losses to R1.2 billion, at the end of December.

Foreign currency losses reduced by 16.5%, to R924 million, and the group's depreciation charge increased by 12%, to R13.2 billion, at December.

MTN's reported capital expenditure was R19.5 billion, 38% lower than in 2009 and slightly below estimate.

“The lower-than-expected expenditure was partially attributable to rand strength, as well as lower expenditure in Nigeria and Iran.”

“MTN SA's performance was encouraging in a market that is technically more than 100% penetrated, driven by high growth in the prepaid segment,” says the company.

The South African operation increased its market share to 36%. MTN attributes this to brand support during the 2010 Fifa World Cup and the Ayoba campaign.

Subscribers increased by 17.3% for the period, to 18.8 million. “This was mainly due to the 18.6% increase in the prepaid segment, to 15.5 million users.”

The company says the postpaid segment continued to grow, but at a slower pace, increasing its subscriber base by 11.3%, to 3.4 million, at the end of 2010.

MTN SA's revenue grew by 8% for the year, driven mainly by an 8% growth in airtime and subscription revenue. Strong growth in data revenue of 47% was offset by a 10% decrease in interconnect revenue.

“MTN SA's EBITDA margin increased by 2.6%, to 34%, from the prior year. This was partly driven by an increase in on-net traffic, which resulted in interconnect costs reducing by more than the reduction in interconnect revenue.”

Capital expenditure reduced to 11% of revenue, from 18% in the prior year.