More Africa NewsMTN South Africa takes wholesale hit in roaming switcheroo

March 11, 2021by myles0

Wholesale revenue at MTN South Africa declined by 16.4% in the 2020 financial year after the discontinuation of the company’s roaming supply agreement with Telkom and after being forced to account for revenues from Cell C on a cash basis.

Telkom switched roaming partners in mid-2019, cancelling its agreement with MTN in favour of an arrangement with Vodacom but picking up a roaming deal with Cell C, which was previously roaming with Vodacom. Smaller mobile operators Telkom and Cell C have roaming agreements to provide coverage to their customers in areas where they don’t have base stations — mainly in more outlying areas of the country where it’s not financially feasible to deploy infrastructure as a third or fourth operator.

For the year to end-December 2020, MTN recognised R2-billion in roaming revenue from Cell C — up by 10% on the revenue recognised in the previous year. However, R414-million of Cell C roaming revenue remained unrecognised as of December 2020.

“These payments are anticipated in 2021 upon successful recapitalisation of Cell C and will be recognised in 2021,” MTN said. “MTN South Africa commenced phase two of the roaming agreement with Cell C, effective 1 May 2020. The arrangement envisages a three-year transition towards a full national roaming arrangement under which MTN will carry all of Cell C’s network traffic.”

MTN South Africa reported growth of 1.6% in service revenue in 2020, with data revenue growing by 15.3%, helped by the Covid-19 pandemic and work-from-home measures. Earnings before interest, tax, depreciation and amortisation rose by 4.5% to R17.7-billion.

Capex moderation

Capex came in at R7.5-billion, a moderation in spend compared to high levels of network investment in recent years that have ensured MTN has the best network in South Africa, according to various independent surveys.

The 1.6% growth in service revenue was supported by the prepaid (+2.9%) and post-paid (+8.6%) businesses, which recovered well from the impact of regulatory changes in 2019, MTN said.

“Overall service revenue was also boosted by a resilient performance in the broader consumer business unit and growth in the enterprise business unit. The core mobile business grew service revenue by 4,6%.”

Total subscribers increased by 3.1 million to 32 million on stronger gross additions and improved churn. The main driver was an increase in prepaid customers by 2.4 million, to a base of 25.3 million – the highest level in two years. Post-paid subscriber numbers increased by 664 000 to 6.8 million.

The South African unit reported 207 000 active MoMo (mobile money) customers after relaunching the service in the local market in January 2020. The company’s main focus in this space is around distribution and extending cash-in and cash-out points through both formal and informal channels. 

Source: Tech Central

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