MTN shares slide over Nigerian subscriber forecast cuts

Raising cogent concerns about its capacity to stave off heated competition in Nigeria, MTN Group yesterday slashed its full-year forecast for the country’s subscriber growth by nearly a third, which sent its shares sliding down.

MTN’s shares were down 4.6 percent at 232.99 rand at 12:37 GMT, on track for its biggest one-day fall in over a year. MTN now expects to add 3.5 million users in Africa’s most populous nation this year, from its previous forecast of 5 million.

In total, it has 58.4 million customers in Nigeria, a slight decrease from three months ago. Market observers are of the view that regulatory and competitive pressures have seen the emerging markets-focused company embroiled in a heated battle to stay ahead of its competitors such as the Etisalat Nigeria, Bharti Airtel and Globacom, the second national carrier.

Last year, the Nigerian government had disclosed plans to conduct a major shakedown of MTN Nigeria operations after a probe revealed that the South African mobile phone company controls 44 percent of mobile voice telephony service, which, according to the Nigerian Communications Commission (NCC), undermines competition in the industry.

“Performance was impacted by continued aggressive competition and stringent regulatory requirements,” said Sifiso Dabengwa, chief executive officer, MTN Group, in a statement.

Due to its dominant position in Nigeria’s telecommunications market, the telecoms regulator required MTN to offer both its customers and those of competing operators similar tariffs when using its network. As a stop-gap measure, MTN Nigeria relied on short-term promotions to drive sales, but these too were banned by the regulator.

Earlier in the year, NCC fined MTN, and two other operators, the cumulative sum of N647.5 million ($3.89 million) for missing their QoS targets for the month of January.

The telecoms regulator also directed telcos to stop the sale of new SIM (Subscriber Identity Module) cards.

Commenting on MTN’s revision of its subscriber forecast, Nadim Mohammed, a telecoms industry analyst at First Avenue Investment Management, said it came as a bit of a surprise.

“Many participants in the market were looking for a correction in Nigeria. You’ve got a very capable regulator in the country now and they are doing the right things to promote competition, better costs to communicate and a better experience for the consumer. I am actually worried,” Mohammed said.

MTN booked revenue growth of 10.7 percent in the six months to end-June. Nigeria accounted for nearly half of its earnings before interest, taxation, depreciation and amortisation (EBITDA) in that period and 37 percent of its revenue.

The company reported 2 percent growth in total users in the three months to end-September, bringing its customer base to 219 million users across its 22 markets in Africa and the Middle East.

In its home market of South Africa, where it lags behind rival Vodacom, MTN said it added 1.4 million new subscribers. Data revenue was up 34 percent so far this year, and now contributes to nearly 18 percent of its total revenue.

Ben Uzor, with wire reports