50 / 96
South and East Africa
continued
Operational reviews
continued
MTN South Africa was named the Most Valuable
Brand in the country by Brand Finance.
Fibre to the home connections remain a priority with
approximately 13 000 homes passed for the period.
In addition, the acquisition of Smart Village (which
has a presence in gated estates, apartment blocks,
business parks and shoppingmalls), was completed
in December 2016, adding 22 000 homes passed to
the network with approximately 7 000 homes
connected.
In the year, there were further delays in the process
to assign spectrum to interested parties through an
auction process initiated by the regulator after it was
successfully challenged by the Telecommunications
Minister. Without additional spectrum, telcos are
erectingmore sites and re-farming existing spectrum
to meet demand.
MTN South Africa improved its BBBEE contributor
status in the year, lifting it to level 2 from level 3 in
2015.
In December 2016, the MTN South Africa Foundation
celebrated 15 years of creating shared value in our
communities. We continued to focus on the education
sector, promoting the use of ICT in enhancing digital
teaching and learning.
Gaining momentum after the
subscriber registration process
MTN Uganda
increased its subscriber base by
18,1% to 10,5 million. This was mainly attributable to
the reconnection of previously disconnected
subscribers during the subscriber registration
process in the second half of 2015. The performance
was supported by new acquisitions on the all-net
call per second price plan, segmented value
propositions and a decline in churn. Market share
grew to 53,3% from 51,1%.
Presidential and parliamentary elections in the first
quarter of 2016 resulted in policy continuity in a
relatively stable political and security environment.
Total revenue declined by 1,9%*, led lower by a
decrease in outgoing and incoming voice revenue.
This was mainly impacted by the disconnection of
subscribers in 2015 as well as the East African
Community’s One Network Area, which means that
all calls between member countries are billed as
though they were local.
Data revenue increased by 18,8%* and contributed
34% to total revenue. This was supported by
attractive data bundles with increased data usage,
below-the-line campaigns and a LTE SIM swap
campaign to drive LTE adoption and penetration.
Digital revenue contributed 71% to data revenue,
supported mainly by mobile financial service
revenue. E-commerce products, such as mobile
advertising, and MTN Class which is a value-added
service product in education, also contributed
positively to digital revenue. The number of MTN
Mobile Money active customers increased 12,4% to
4,1 million, as a result mainly of the introduction of
savings and loan products. The launch of MoKash
recorded approximately one million customers in
under six months.
MTN Uganda’s EBITDA margin decreased by
4,9 percentage points to 29,6%, impacted by once-
off subscriber registration costs and an inventory
impairment charge as well as higher maintenance
and tower leasing costs.
Capex decreased by 23,7%* to R758 million. During
the period, 375 co-located 3G and 110 LTE sites
were rolled out. These sites were rolled out as
upgrades to existing sites, which will provide future
cost efficiencies as well as improving the quality and
capacity on the network.
Our NPS increased 3,5 percentage points in
the fourth quarter from 11,7% in the same quarter
of 2015.
The MTN Uganda Foundation remained committed
to supporting education, providing 10 scholarships
to young Ugandan women to study at university,
providing ICT resource centres, and supporting the
Skilling for the Future initiative.
Looking ahead in SEA
We anticipate a positive growth trend for MTN South
Africa in 2017, with mid-single digit revenue
growth*** and the EBITDA margin expanding by
between 50 and 100 basis points (bp)***, supported
by a strong focus on customer service and
significantly improved network quality, capacity and
speed. A stronger network will also facilitate greater
customer retention. Through IGNITE, we expect an
improvement in EBITDA of between 15%*** and
20%*** by the end of 2018.
We expect a total of 2,24 million net additions in SEA
in 2017, after operations in the region added a net
1,885 million new subscribers in 2016. Uganda is
expected to continue to lead net additions in the
region, with a forecast 1,11 million new users (from
1,62 million in 2016). MTN South Africa expects net
additions of 630 000 in 2017, after adding a net
175 000 in 2016.
We have authorised capital expenditure of
R13 368 million in 2017 for the region, compared
with capex of R12 896 million in 2016. The lion’s
share of capex is destined for South Africa.
* Constant currency (organic) information.
** Reported – includes hyperinflation and the relating goodwill
impairment, tower profits, the Nigeria fine and the MTN
Zakhele Futhi impact.
*** The forward-looking financial information disclosed in this
integrated report has not been reviewed or audited or
otherwise reported on by our external joint auditors.
MTN Group Limited
Integrated Report 2016
48