•As telco blames CBN, AGF for delayed listing on NSE
MTN Group, yesterday, announced a 28.5 per cent revenue decline on MTN Nigeria services, blaming the continued optimisation of its value added services, VAS.
This is also as the telco blamed the Central Bank of Nigeria, CBN, and the Attorney General of the Federation, AGF, for its inability to accomplish listing process in the Nigerian Stock Exchange market.
MTN Group president/Chief Executive Office, Rob Shuter, who made the disclosures while delivering the Q3, 2018 financial year report, said the loss was expected to continue to the next quarter due to expected low VAS revenue earnings.
The Nigerian Communications Commission, NCC, had on May 21, 2018 issued a directive to all network providers to desist from imposing any value added services on the subscribers without their express permission.
The commission warned that service providers in the country that automatically renew data packages without the consent of the subscribers or inundate them with unwarranted value added services, risk N5 million fine.
The commission requested them to optimise their VAS services to conform to the new order.
It said the warning became imperative in view of the mounting complaints from subscribers against the service providers for breaching extant rules.
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Shuter also pointed to two incidents, the allegation by CBN of improper dividend repatriations by MTN Nigeria between 2007 and 2015 of $8.1 billion and the allegation by the AGF that MTN accumulated unpaid taxes on foreign payments and imports of approximately $2 billion, which have hampered efforts to list MTN in the Nigerian stock market.
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However, the company said despite all that, it was still committed to listing in the market and would continue to work towards a successful completion.
Shuter said: “MTN recorded an improved operational performance in many markets in the third quarter. Group service revenue grew by 10 per cent year-on-year, ahead of our medium-term target of upper-single-digit growth, supported by continued strong growth in voice and data revenue. These results were delivered in challenging operating and currency conditions.
“We successfully completed the listing of MTN Ghana. MTN Nigeria’s plans to list have been challenged by the recent CBN and Attorney General of the Federal Republic of Nigeria, AGFRN, matters, however, MTN remains committed to the listing in Nigeria and work continues in this regard. In the quarter, the group engaged extensively with authorities in Nigeria to deal with the matters they raised.”
Meanwhile, the company has leveraged on the services of its Nigerian operations to grow its overall performance, increasing user base to 225.4 million – an addition of 2.5 million or 1.1 per cent in the third quarter of 2018.
Although the Nigerian arm had a mixed revenue experience during the quarter, where data revenue, outgoing voice revenue increased but digital revenue decreased, Shuter believed the region had an excellent quarter.
According to the report, “MTN Nigeria had an excellent quarter, increasing service revenue by 17,4% YoY, towards the upper end of our medium-term target for Nigeria of double-digit growth.
“This was led by a 52,5% increase in data revenue and 21,5% increase in outgoing voice revenue. Data revenue growth was supported by an increase in active data
Subscribers as well as more smartphones on our network, the result of various Customer Value Management Strategy, CVM and Original Equipment Manufacturers, OEM-partnership initiatives.”
Digital revenue decline
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However, Shuter also added that “Digital revenue declined by 28,5% following the continued optimisation of our value-added services (VAS) business. We completed the final element of this optimisation, suspending auto-renewal of subscriptions, in mid-September which means that digital revenue will continue to be impacted by lower VAS revenue in the fourth quarter, after which we expect it to stabilise.”
MTN Nigeria reported 17.2 million active data subscribers, up 15,1% QoQ, and 2,5 million MoMo customers, up 12,4% QoQ.
The EBITDA margin expanded to 43,2% in the first nine months of the year, up 4,7 percentage points from end-September 2017, driven by the strong growth in revenue, mix of revenue and further cost optimisation efforts.
MTN’s revenue loss on digital services in the third quarter 2018 and Shuter’s prediction that it will extend to the fourth quarter, did not come as a surprise, following the crises that had befallen the Value Added Services, VAS, sector.
The Nigerian Value Added Services, VAS, market is valued at about N79 billion. Yet, it is dangerously going into comatose. The business which until recently, appeared the most innovative segment of the Nigerian technology ecosystem, has lost its glory due to continued allegations and counter-allegations.
There are allegations of sharp and underhand practices against the VAS providers, particularly on their billing method. Another dangerous factor sounding the death knell for the market is the revenue sharing dispute between the VAS providers and the telecom operators, whose platforms, the providers use.
There is also the allegation of high handed regulatory methods, which the providers complain stifle their operations and revenue bases.
In all of these factors, the VAS operators, under the aegis of Wireless Application Services Providers of Nigeria, WASPAN, Nigerian telecom operators and the Nigerian Communications Commission, NCC are locked into argument of who is at fault.
Meanwhile, while the three apex stakeholders are looking for solutions, the regulator, the NCC, had asked all operators to optimise their VAS operations while it tweaked the regulations to suit the profile and size of the market.