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MTN pleasantly surprised over growth in voice revenue in Nigeria

MTN pleasantly surprised over growth in voice revenue in Nigeria

As part of its financial results for 2017, MTN has reported that voice (measured as talk time in minutes) in the Nigerian market increased by 17% year-on-year (y-o-y).

The company has experienced a 7.2 % y-o-y growth in the contribution of voice to overall service revenue in that country. Voice revenue for 2017 stands at 3.2 billion naira.

Ralph Mupita, Group Chief Finance Officer at MTN says the telco was pleased to achieve the growth in voice, although it does not expect this trend to continue for much longer, particularly given the experience in other markets where voice revenue remains flat in constant currency.

"It was really good to see the continued growth in our voice market where we had a pleasing seven percent in growth for the period. Voice represents seventy five percent of service revenue in Nigeria and seeing that level of growth left us pleased. Two big factors added to that growth and those are that we had net subscriber growth and we have returnees to the network. These two factors had an impact during the year. We expect positive growth for voice in 2018 but not at the exceptional level that we saw in 2017."

MTN defines returnees as subscribers who stopped using their MTN SIM card and moved to another network before eventually returning to the MTN network.

Rob Shuter, Group president and CEO at MTN says the development is a reminder that voice remains a cornerstone of the business at MTN.

"Some in the industry think everything is about data and digital, but let's remind ourselves that for MTN as a Group we are a sixty percent voice business and for MTN Nigeria it is a seventy five percent voice business. We are certainly building the data and digital businesses, but we better take good care of voice. Voice in Nigeria is still a growth story."

Shuter adds that while data in Nigeria saw growth of 86.6% in 2017, this was off a low base.

MTN has only 14.1 million active data users in the country. Shutter says data has very low tariffs and modest adoption in Nigeria (digital business declined by 3.5%, according to the latest financial results), but the company says the market remains well-suited to data monetisation going forward and so has invested in 1520 new 3G sites and 538 4G sites.

During the last quarter of 2017 the operator's Nigerian business recorded net additions of 1 965 518 to bring the subscriber base at year end to 52,3 million.

MTN noted that Nigeria experienced a markedly weaker naira in 2017, as well as tough currency liquidity challenges earlier in the year, but there was improvement as the year progressed.

The company expects to achieve double‐digit constant currency service revenue growth in Nigeria over the next few years.

It is also confident the IPO will go ahead in the country by the end of the first half of 2018.

Capital expenditure by the telco in Nigeria over 2017 reached R9 billion and was second only to the R11, 5 billion spent in South Africa, among all of MTN's 23 markets.

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