“Clearly, Etisalat’s Network, From A Data Point Of View, Has Been Better Than Ours” – Sifiso Dabengwa (MTN CEO)
Africa’s top mobile phone operator, MTN Group, gave a downbeat outlook for Nigeria, its biggest market, on Wednesday after losing high-end users to Gulf rival Etisalat.
MTN reported a 10% decline in first-half earnings, and is fighting to maintain its lead in Nigeria ahead of competitors such as Etisalat and India’s Bharti Airtel.
But poor network quality in vital areas of the capital Abuja and in the commercial hub Lagos, has prompted its more affluent clients to switch to Etisalat.
MTN CE Sifiso Dabengwa was frank about the network superiority of the Gulf’s second-biggest mobile phone operator.
“The key issue really for us has been to improve the data quality and speeds,” Mr Dabengwa told reporters and analysts at the company’s results presentation.
“Clearly, Etisalat’s network, from a data point of view, has been better than ours.”
MTN will use the bulk of a R19bn spending package for the rest of this year to expand high-speed networks in Nigeria and SA, where rivals such as Vodacom Group and Cell C have slashed voice tariffs to gain market share.
However, spending on a network in Nigeria, Africa’s most populous country, is unlikely to deliver a strong enough performance to offset the impact of a sharp economic slowdown that is curbing consumers’ disposable income.
“We expect the balance of the year to remain challenging for MTN Nigeria,” the company said in its results announcement.
MTN reported a 10.3% fall in headline earnings per share from a year earlier to 654c for January-June.
Its shares, down 6% this year, slipped just 0.3% after the results as the company had warned that headline earnings per share would fall by 10%-15%. Headline earnings per share are the main profit measure in SA and strip out certain one-off items.
Handset supply disruptions in SA, due to a seven-week strike by about 2,000 entry-level staff over pay, also hurt earnings. It prompted MTN to slash its full-year forecast for subscriber growth in SA, its second-biggest market, by 25%.
Globally, its subscribers rose by slightly more than 3% to 231-million during the first half.
MTN’s third-largest market is Iran and it hopes to repatriate about $1.1bn in accumulated dividends frozen by international sanctions once Iran’s nuclear deal with world powers is finalised, said Brett Goschen, MTN’s chief financial officer.