South Africa’s MTN Group has appointed Rob Shuter as chief executive after the mobile phone network company announced a R2.6bn ($198m) loss in earnings in 2016. Shuter, who previously worked for London-headquartered Vodafone, was appointed on Monday to head up the revamped senior management team, following the completion of a strategic review.
MTN’s earnings loss was the first time in its 23-year history that the telecoms giant had reported a fall in income. Meanwhile, pre-tax profits fell from R36.5bn ($2.8bn) in 2015 to R18.2bn ($1.4bn). However, MTN’s consolidated revenue increased year-on-year by 0.4% in 2016 to R146bn ($11.1bn), while its subscriber base in Africa and the Middle East grew by 3.3% to 240.3m over the course of the calendar year.
The Group executive chairman, Phuthuma Nhleko, commented: “MTN Group’s financial results for 2016 reflect the most challenging year in the company’s 22-year history, precipitated by a number of material regulatory, macro-economic and political challenges experienced across our regions. However, despite these difficulties, the business began to show encouraging first signs of a turnaround.”
The loss mainly stemmed from its tribulations with Nigeria’s telecoms regulator, the Nigerian Communications Commission. It was originally fined $5.2bn last year for its failure to disconnect unregistered SIM cards, as instructed by the regulator. Some of the SIM cards appear to have been used by Boko Haram.
MTN has since managed to negotiate a reduction in the fine to $1.7bn, which is to be paid over three years, while in another move that appears to form part of the settlement, the company is to seek a listing in Nigeria. MTN Nigeria lost a lot of subscribers as a result of the SIM scandal, but its revenue in January 2017 was 16% higher year-on-year, although the depreciation of the naira against the US dollar affected the earnings before interest, tax, depreciation and amortisation (EBITDA) margin and increased costs from transactions carried out in US dollars.
The firm has experienced other problems in Nigeria: its headquarters in Abuja were attacked by a mob last month, apparently in reaction against attacks on Nigerians in South Africa; while its network went down for a time in early February. The company has invested more than $16bn in Nigeria to date and it still has 62m active subscribers in the country, although its actual number of customers will be lower, as many people hold multiple accounts.
MTN admitted that it had had network, systems and customer service challenges in its main market, South Africa. MTN South Africa’s EBITDA, impairment of goodwill, net monetary gains and share of results of joint ventures and associates after tax were 31% higher in the second half of 2016 than in the first six months of the year.
As with other African telecoms operators, having attracted a large customer base in recent years, the company is now keen to increase its average revenue per user (ARPU) in order to boost income and profits. It is promoting mobile money services and encouraging greater data use. Group data revenue rose 19.7% to contribute 27% of Group revenue in 2016, as the company increased its network investment in its three biggest markets: South Africa, Nigeria and Iran.