MTN share price rockets despite losing 1.7m subscribers as new Nigerian rules bite

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MTN's share price jumped by more than 12% after the company reported strong growth in quarterly revenue.
MTN's share price jumped by more than 12% after the company reported strong growth in quarterly revenue.
  • MTN's share price jumped by more than 12% after the company reported strong growth in quarterly revenue.
  • This was despite an overall decline in total subscriber numbers due to new rules on SIM registration in Nigeria. 
  • The company is also still struggling to repatriate more than R4 billion from Nigeria.

MTN's total number of subscribers fell by 1.7 million to 277.9 million in the quarter to end-March, the company said on Wednesday in its quarterly update to end of March.

This was due to the impact of a stringent SIM registration process imposed by Nigerian authorities since last year. Excluding the impact of MTN Nigeria, MTN's total subscribers increased by 3.4 million.

MTN is also struggling to repatriate R4.3 billion in dividends from Nigeria due to challenges securing foreign currency in that country.

Still, the group - the largest cellphone service provider on the continent - saw its share price jump 12% by Wednesday afternoon following the news that its quarterly service revenue grew by almost 18% to R42.3 billion, and its earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 21%. The company's share price was last trading at R99.34.

Group data revenue grew by almost a third thanks to sustained demand for work-from-home services, digital entertainment as well as online education offerings, MTN said. 

The company said many of the markets it operates in have started to emerge from the second wave of Covid-19 infections.

"While their economies are on a trajectory of steady recovery, we remain conscious of the ongoing impacts and challenges presented by the pandemic."

Nigerian challenges

In December 2020, Nigerian authorities instructed telecoms operators to register mobile phone users, amid concerns that unregistered SIM cards are being used by criminals and insurgents.

The company said MTN Nigeria has so far made "good progress" with the registration,  with more than 35.5 million subscribers having submitted their national identification numbers (NINs) for every SIM connected to networks in the country. The verified users represent nearly 63% of the company's subscriber base and 50% of service revenue.

The government has granted companies a deadline extension for registrations 30 June 2021. Active data subscribers increased by 1.3 million to 115.6 million.

The operator's liquidity headroom stood at R42.1 billion at the end of the quarter, consisting of R17.1 billion in cash, excluding the restricted cash in Nigeria and R25 billion in committed, undrawn credit facilities.

In South Africa, the potential sale and leaseback of MTN South African's passive tower infrastructure has attracted interest from 20 parties, and the process is expected to be concluded in by the end of the third quarter. The local unit added 16 000 more subscribers in the quarter, with prepaid users hitting 25.3 million, and mobile data revenue grew by 18.5%, driven by data traffic growth. 

The company reiterated that it remains committed to its orderly exit of the Middle East, with current engagements and focus on Syria, Yemen and Afghanistan.


The operator said it was optimistic that the pending litigation which has halted the planned auction of spectrum by the Independent Communications Authority of SA (Icasa), adding that it has agreed a proposal brought by the regulator on finding a settlement with the aggrieved companies. 

In March, Telkom and were granted a court order preventing Icasa from proceeding with the auction. MTN is one of the companies that took legal action against some aspects of the auction process, and its case is yet to be heard.

It said its concerns on the matter relate to the inclusion of the vital 3.5GHz, the "5G anchor band" in the opt-in round and the exclusion of MTN from participating in the opt-in round, due to the arbitrary Tier 1 and Tier 2 classification.

"MTN SA has agreed to Icasa's proposal to work towards entering settlement negotiations with the regulator to find a mutually acceptable solution on the narrow concerns raised by MTN SA", it said regarding the regulator's invitation to apply, which was issued at the of September.

In 2020, Icasa released temporary spectrum to companies in a bid to help operators meet demand during the months of Covid-19 lockdown which saw a surge in internet demand. MTN says is it negotiating with the regulator for another extension of temporary spectrum until the delayed auction is finalised.

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