MTN Nigeria performance review

Michael Ikpoki CEO MTN Nigeria

MTN Nigeria grew its subscriber base by 19,7% in 2013, bringing total subscribers to 56,8 million at the end of December. This was a notable turnaround in the face of aggressive competition and a difficult operating environment. The strong growth was driven by improved segmented offerings to customers, a better quality network, and was supported by seasonal promotions aimed at growing subscribers and increasing usage.

Total revenue increased by 5,7%*. Revenue growth was dampened by interconnect revenue, which declined by 23,0%* following a 40% reduction in mobile termination rates at the beginning of the year and a lower effective tariff. The effective tariff declined by more than 30,0% (LE) in the year. Fourth quarter revenue showed encouraging growth, ahead of expectations, increasing by 15,3% in local currency terms over the comparable prior year quarter. This follows the mandatory subscriber registration disconnections, the reconnection of service in the three northern states and the lifting of the promotions ban which hampered revenue in the first half of the year.

Data revenue increased by 26,3%* and now contributes 15,1% to total revenue. This growth was driven mainly by innovative local content and attractive data bundles, but was limited by slow speeds resulting from the high volume of traffic on MTN’s 3G network. The number of active smartphones on the network increased by 63,1% to 6,2 million at the end of December.

The EBITDA margin (excluding the reversal of prior year management fees provision) declined by 2,9 (3,2*) percentage points to 55,4% as a result of slower revenue growth. Assuming no management fees or other prior year adjustments, the underlying EBITDA margin was 57,0%. The operation performed well on cost-optimisation initiatives, reporting subdued opex growth. We realised cost savings in many areas, including marketing and the revised commission structure implemented during the year. Reported EBITDA increased by 29,7% mainly due to the reversal of the management fee provision. The current year reversal of management fee provisions related to prior periods amounted to R1 778 million, while the management fee expense for 2013 was R758 million.

Capital expenditure for the year increased to R14 298 million and was aimed at significantly improving the quality and capacity of the network. The network KPIs set out by the Nigerian Communications Commission were achieved at the end of December 2013. During the year, MTN Nigeria rolled out a record number of 2 743 new 2G sites and
1 607 co-located 3G sites. The company is fully committed to ensuring that the quality and capacity of the network remains at the appropriate standards.