Africa foremost in cellphone subscriber growth

Mobile subscriber growth in Africa remained the fastest in the world‚ positively affecting telecoms markets‚ as well as African economies at large‚ professional services firm Deloitte said.

Photo via za.fotolia.com

Slow growth in subscribers

Last week‚ MTN reported an overall 1.1% increase in customer numbers to 210.1-million. The slow growth in subscribers was mainly due to the disconnection of subscribers in South Africa‚ slower subscriber growth in Iran‚ and the ban on the sale of SIM cards in Nigeria‚ which has since been lifted.

In South Africa‚ customer numbers declined by 824‚768 to 24.9-million due to MTN's decision to disconnect the 973‚064 subscribers who had not generated revenue for 90 days.

Combined prepaid and contract average revenue per user in South Africa declined 11.3% to R100.47 - mainly due to promotional activities and a decline in effective tariffs.

Competition is rising

In South Africa‚ as in Nigeria and other markets in which MTN operates‚ competition is rising and regulators are putting more pressure on firms to cut prices and improve service.

Imara SP Reid analyst Sibonginkosi Nyanga expects an overall improvement in the second quarter‚ but weaker average revenue per user figures will likely continue in the second quarter due to more aggressive promotions. However‚ this is expected to create revenue traction as the promotions will lift the average minutes of use‚ he said.

"Although recent weakness in South Africa is a concern‚ Nigerian and other Opcos' (operating companies) prospects should prove supportive to our 'add' recommendation‚" Mr Nyanga said in a report.

MTN is reportedly in talks with an Asian-based content provider to offer its local customers access to streaming movies and TV shows.

Mr Osborne said that while strong competition was creating a challenging operating environment for companies such as MTN in the South African market‚ "easing competition and growth opportunities in African mobile telecommunications is good news for investors".

Main attraction

He said that African mobile telecommunication companies such as MTN Group‚ Econet and Safaricom were offering a mix of growth and attractive dividend yields of about 6%. This compared to developed world operators‚ for which dividend yield is the main attraction.

"Growth will come from voice calls‚ which is low on a per customer basis‚ as well as from data‚ which is extremely low‚" said Mr Osborne.

At the same time‚ as growth slows and competition becomes less intense‚ some telecoms companies are now looking at enhancing their returns from both their operating efficiency and capital management‚ said Mr Osborne.