BrandArena: MTN bleeding subscribers in Nigeria

Wednesday 29 October 2014

MTN bleeding subscribers in Nigeria

MTN Group, Africa’s largest mobile telecoms operator, slashed its full-year forecast for Nigerian subscriber growth by nearly a third on Thursday, raising concern about its ability to fight off competition in its top market and sending its shares sliding.

The company has been fighting to stay in the lead in Nigeria, Africa’s most populous country, ahead of competitors such as the UAE’s Etisalat, India’s Bharti Airtel and privately-owned local firm, Globacom. It now expects to add 3.5 million users in Africa’s biggest economy this year, from its previous forecast of five million. In total, it has 58.4 million customers in Nigeria, a slight decrease from three months ago.

“That comes as a bit of a surprise. Many participants in the market were looking for a correction in Nigeria,” said Nadim Mohammed, a telecoms industry analyst at First Avenue Investment Management, referring to MTN’s revision to its subscribers forecast.

“You’ve got a very capable regulator in the country now and they are doing the right things to promote competition, better costs to communicate and a better experience for the consumer. I am actually worried,” he added.

Nigerian authorities this year fined MTN and two other operators a combined $4 million and banned them from selling SIM cards, for poor service. Its Nigerian user base was also hit after Islamist group Boko Haram burnt down some radio masts. MTN’s shares were down 4.6 per cent at 232.99 rand at 1237 GMT, on track for their biggest one-day fall in over a year.

“Performance was impacted by continued aggressive competition and stringent regulatory requirements,” Chief Executive Sifiso Dabengwa said in a statement.

Because of its dominant position, Nigerian regulators require MTN to offer both its customers and those of competing operators similar tariffs when using its network. To counter this MTN relied on short-term promotions to drive sales, but this too was banned.

“These regulatory actions are quite severe and it will be hard for MTN to resume anything close to double-digit (growth) again. At best, it will be single-digit positive revenue growth for the next while in Nigeria,” Mohammed said.

MTN booked revenue growth of 10.7 per cent in the six months to end- June. Nigeria accounted for nearly half of its earnings before interest, taxation, depreciation and amortisation in that period and 37 per cent of its revenue.

The company reported two per cent growth in total users in the three months to end-September, bringing its customer base to 219 million users across its 22 markets in Africa and the Middle East. In its home market of South Africa, where it lags behind rival Vodacom, MTN said it added 1.4 million new subscribers. Data revenue was up 34 per cent so far this year, and now contributes to nearly 18 percent of its total revenue.

No comments:

Post a Comment