Industrial action, unkind currency movements and a weak macro economy all hampered South Africa-based operator group MTN’s first half results, with revenue falling 4.9 per cent to ZAR 69.2 billion ($5.41 billion).
Even considered on an organic (constant currency) basis, the group only saw a 0.7 per cent increase in revenue.
The group, which operates predominately in Africa, saw a nine per cent decline in revenue in Nigeria – its largest market – to ZAR 24.6 billion in the six months to end of June. The organic change was a 1.1 per cent decline.
The most extreme example of currency impact was Syria which, among its other difficulties, saw a 26 per cent fall in revenue to ZAR 1.3 billion, while breaking even at the organic level.
In its home market, MTN reported a 1.4 decline in revenue to ZAR 18.8 billion, with the blame falling on a damaging two-month strike and disruptions to its handset supply chain. Handset revenue fell by 27.5 per cent.
Better news at a group level was a 21 per cent increase in data revenue, due to a steep surge in data traffic as well as encouraging growth in digital and mobile money services.
Group profit after tax fell by 19 per cent to ZAR 12.7 billion in the first half, compared to the same period in 2014, a fall exaggerated once the effects of hyperinflation (ZAR 847 million) in Sudan and Syria and profit from tower sales (ZAR 352 million) were stripped out. At the Ebitda level, the fall was a more moderate ten per cent.
The company had warned last month how currency fluctuations would dent its interim earnings.
The group put a brave face on its guidance for the rest of 2015. Domestically, it is looking at “building staff engagement and improving customer service in the South African operation”. Capex plans are being accelerated to take advantage of data growth. And it is looking to strengthen its handset supply chain.
In a separate statement, the group said it continues to negotiate with fixed incumbent Telkom about a roaming agreement for the latter’s fledgling mobile service.
In Nigeria, the group expects the rest of the year to remain “challenging”. Nevertheless, it added: “Notwithstanding tough operating conditions, there will be a strong focus on active subscribers management and providing more competitive voice and data offerings to high value customers”.
Finally, it expects its smaller operations to maintain the growth trajectory of the past six months.