By Olubunmi Adeniyi
MTN Nigeria earnings before interest, taxes, depreciation and amortization (EBITDA) margin decreased 2.9 percentage points to 60.5 per cent as a result of lower revenue due to lower tariffs, a lower interconnect margin due to an increase in off-network calls and increased transmission costs related to higher data volumes, the introduction of WACS cable and the provision in data capacity, its parent company says.
August 8, 2012: MTN Nigeria has performed satisfactorily recording a growth of its subscriber base by 3.7 per cent to 43,184 million in the first half of the year, South Africa’s MTN Group and owners of the local telecoms market leader has announced underscoring the aggressive competition for local market stakes.
MTN Group, which made this disclosure in its latest financial report says that its local operation in Nigeria grossed a total of 4.4 per cent revenue increase at same period driven largely by interconnect revenue growth as well data revenue.
On a general note, MTN Nigeria experienced a tough first half of 2012 mainly due to aggressive pricing competition during the second quarter, driven by a multitude of bonuses on recharge, freebies and other promotional activity.
According to the group, the Nigerian market performance was also negatively impacted by a slower economy and the removal of fuel subsidies, which have led to lower consumer spending on telecoms services.
In the face of the challenges, MTN says its operation in Nigeria maintained its value share and captured more than 50 per cent of first-time users in the market.
The parent company notes that the interconnect and data revenue which increased by 11.5 per cent and 130 per cent respectively benefited from innovative data offerings, improved Third Generation (3G) coverage and an increase in the number of smartphones.
The contribution of airtime and subscription revenue reduced to 63.2 per cent from 66.0 per cent in the prior comparative period while data revenue contribution grew to 10.0 per cent from 7.0 per cent for the telecoms company.
MTN Group notes that airtime and subscription revenue dropped by 4.4 per cent, a function of lower consumer spending as well as a reduction in effective tariffs while SMS revenue also declined by 9.3 per cent largely due to the substitution effect of instant messaging.
MTN Nigeria earnings before interest, taxes, depreciation and amortization (EBITDA) margin decreased 2.9 percentage points to 60.5 per cent as a result of lower revenue due to lower tariffs, a lower interconnect margin due to an increase in off-network calls and increased transmission costs related to higher data volumes, the introduction of WACS cable and the provision in data capacity, its parent company says.
For its local operation, power costs continue to reduce, albeit off a high base, due to base stations being powered by more fuel efficient hybrid systems, according to the telecoms company.
As its capital expenditure (CAPEX) for the period amounts to N87 million, the MTN Group says its operation in Nigeria has continued to enhance the quality and capacity of its network as well as expand its 3G coverage.
“At the end of June, 554 2G sites and 562 3G co-located sites were added bringing the total number of 2G sites to 7 611 and 3G co-located sites to 2 636. 3G population coverage improved to 35% from 28% in the previous comparative period”, says MTN Group.
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Do you think the new innovation of porting in Nigeria that was recently introduced by MTN would give an added advantage to them or to their competition who charges a far more reduced airtime rate?