- Data income rises to N74bn
Nigeria’s largest telecommunications operator, MTN, has expressed worry over a decline in its voice revenue as subscribers made fewer calls in the first quarter of this year.
The telco blamed this on the effects of the coronavirus pandemic, noting that subscribers’ earning capacity had reduced.
The company, however, recorded a sharp increase in data usage over the same period as the pandemic forced many to work from home using data.
The telco’s data revenue jumped by 59.2 per cent to N74 billion in Q1 2020. While voice calls have been the main revenue earner for the telco, it only grew by 7.4 per cent in the first quarter.
MTN Nigeria’s management, while speaking on the company’s Q1 financial performance, said: “Voice revenue has experienced an immediate impact from the current macro disruptions, based on early trends, especially in the mass market segment. There has been a decline in voice traffic post-COVID lockdown largely due to a slowdown in economic activity and a reduction in people’s earning capacity”.
The CEO, MTN, Ferdinand Moolman, noted that although the company witnessed growth in data REVENUE, saying “it does not fully offset the decline in voice revenue.”
He added that this may persist with the extension of the lockdown, and continued macroeconomic and other challenges.
“Towards the end of March, we started experiencing a change in traffic patterns with a drop in voice traffic which was partially offset by an increase in data traffic on the network. Data traffic increased as customers began to adopt digital channels for most of their activities and routines including telecommuting, entertainment, and social media engagements due to the lockdown. To accommodate this, we have deployed additional resources to upgrade the capacity of the network,” Moolman stated.
He noted that while the impact of COVID-19 on its first-quarter performance was not significant, it may take a serious toll in subsequent quarters.
“Given that lockdown measures only started towards the end of the first quarter, and given the uncertainty associated with the likely duration and related economic impact of the COVID-19 pandemic and its effects on our customers, unstable oil prices as well as pressure on the rate and availability of foreign exchange, it is currently too early to reliably quantify the direct or indirect financial effects on our business going forward,” he said.
He said the company had, however, activated a business continuity plan and implemented extensive response measures aimed at mitigating the potential impact on the network and overall business performance.
According to him, the continuity plan covers, among others: supply chain, management of credit and liquidity, currency risk, counterparty risk, and potential revenue impacts from reduced consumer spending.
MTN’s financial statement for the Q1’20 showed that the company recorded a solid performance in the quarter, building on the growth momentum it achieved in Q4 2019. Service revenue was strong and rose by 16. 7 per cent driven by voice and data revenue as 4.2 million subscribers were added to the network driving voice revenue growth of 7.4 per cent.
According to him, “data revenue increased by 59.2 per cent supported by growth in data traffic with a further 1.7 million active subscribers connecting to the internet during the quarter. We continued to deepen data penetration with the further rollout of 46 sites, increasing population coverage to 48 per cent in Q1 2020 from 44 per cent as of year-end 2019.”
Moolman said the company also saw strong growth in digital and fintech revenue with digital revenue growing by 63.7 per cent, while fintech was up by 36.1 per cent.
“Our mobile money agent network has grown to 1 78,000, adding 70,000 agents during the quarter,” he added.
The MTN boss said the performance was achieved against the backdrop of several developments during the quarter.
According to him, Value Added Tax (VAT) was increased in February 2020 from five per cent to 7.5 per cent, which adversely affected both revenue and costs.
“The situation has been exacerbated by upheavals in the global oil market, which put significant downward pressure on all prices leading to an exchange rate adjustment by the Central Bank of Nigeria on March 20, 2020, thereby increasing some of our costs. In addition, a series of lockdown measures being implemented globally in response to the COVID-19 pandemic resulted in significant operational challenges and supply chain disruptions,” he said.