MTN South Africa expects its digital business to see triple-digit growth in 2017.
This is according to MTN SA CEO Mteto Nyati, speaking to ITWeb after the group's full-year results presentation in Johannesburg yesterday.
Nyati says revenue from digital jumped about 77% year-on-year for the 12 months ended 31 December. This was attributable to local and international content, and digital revenue now contributes 16% to MTN SA's total data revenue.
"Last year, the digital revenue was from very basic services, ring-back tones and music, etc. But in October last year, we put together a business case, which has recently been approved, that will help us to deliver eight new digital services in SA. You will start to see the impact of this coming out in this current financial year − probably starting around June − and we expect triple-digit growth out of the digital business in this current financial year," he adds.
After a tough first half of the year, MTN SA showed a positive turnaround in the second half, which it says was a benefit from its improved 3G and LTE networkquality and aggressive sales of smartphones. This as the group reported an overall full-year headline loss per share of 77c, compared to headline earnings per share of 746c a year ago, in what it called "the most challenging year in the company's 22-year history".
MTN SA's revenue grew by 4.7% to R41.9 billion, mainly as a result of device revenue. Data revenue also jumped by 11.4% for the 12 months, contributing 34% to total revenue.
MTN saw subscriber numbers in SA tick up by 0.6% (175 000) to 30.8 million at the end of last year. MTN is moving closer to its biggest competitor Vodacom, which had 36.4 million active customers in SA at the end of December.
MTN's subscriber growth was driven by its prepaid segment, which increased its base by 0.9% to 25.6 million. However, the number of postpaid subscribers declined by 1.1% to 5.2 million − largely impacted by network quality challenges experienced, and systems and customer service issues in the first half of 2016. The group plans to gain another 630 000 new subscribers this year.
"We feel we are getting to a point where the market is largely saturated; the game is no longer going to be about new subscribers but more about retention. This means having a much deeper understanding of your customers and so we are investing in data analytics that will help us provide better service and products to our customers," says Nyati.
The group added 7.9 million subscribers during 2016 and now has 240.4 million customers in 22 operations across Africa and the Middle East. It plans to add another 8.3 million across its operations in 2017.
MTN SA's service revenue, which excludes device revenue, increased by almost 2% for the period, driven by good growth in data revenue. The number of smartphones on the network also increased by 15.3% to 10.5 million, while the number of megabytes per user increased 46.7% for the period.
For Nyati, improving network quality has been a goal since he took over as SA CEO in 2015.
"In the last year, we targeted the top eight citifies in SA − where most of our high value customers live − and decided we wanted to be number one in those cities. We have just done a benchmarking exercise recently in four of those cities and found that in three [Cape Town, Durban and Tshwane] we are now ahead of the competition."
MTN SA retained a strong focus on 3G and LTE network investment in 2016, and capital expenditure increased by 1.3% to R11 billion – including the roll out 1 134 co-located 3G sites and 1 538 LTE sites.
"Last year, we targeted the top eight cities in the country; this year, we are targeting smaller towns. The other plan is that a number of our IT systems need to be revamped and upgraded to improve customer service – so a significant amount of capex is going to that in 2017."
He says MTN also revamped 54 of its stores last year and plans to do another 200 this year. This has paid off because the traffic through the revamped stores is almost double what it was before, he notes.
The operator's push into fibre remains a priority and it passed 13 000 home connections during the period. In addition, the Smart Village acquisition was completed in December 2016, adding 22 000 homes passed to the network, with approximately 7 000 homes connected. MTN revealed it paid a cash consideration of R220 million and a deferred consideration of R12 million for 100% of the share capital of Smart Village.
"The work we have done in SA since July 2015 is starting to pay off. If you look month after month, we are doing better than the previous month, and it's a trend I see continuing. As we start to go into new towns, we will start to see that accelerate further. So my sense is that from a service revenue level we should be in line with, or slightly above, the guidance of mid-single-digit growth," Nyati concludes.
Source: http://www.itweb.co.za/index.php?option=com_content&view=article&id=159902