Data-expiry rules do not faze MTN
• Potential impact of regulations on growth is however a big risk, says analyst who remains largely bullish about services provider
New data-expiry rules will be manageable and data usage in SA will continue to grow rapidly, says MTN CEO Rob Shuter. MTN is studying the End-User and Subscriber Service Charter Regulations that the Independent Communications Authority of SA published in late April and is in talks with the regulator.
New data-expiry rules will be manageable and data usage in SA will continue to grow rapidly, says MTN CEO Rob Shuter.
MTN was studying the EndUser and Subscriber Service Charter Regulations that the Independent Communications Authority of SA (Icasa) published in late April, and was in talks with the regulator, Shuter said last week.
The rules stipulate that mobile operators must allow customers to roll over unused data. They will also have to notify consumers when their usage is at 50%, 80% and 100%.
Operators must also allow consumers to transfer data to others, while licencees will no longer be allowed to charge outof-bundle rates for data when it is depleted without consumers giving “specific prior consent”.
Excelsia Capital analyst Mark Narramore, who is largely bullish on MTN, said the potential impact of the rules on data growth was “a big risk”.
Shuter, however, said parts of the regulations were “very sensible — things like notifications for customers, we do a lot of that already … but we will have to understand it all in a bit more detail”.
MTN, which cut its headline out-of-bundle data price to 60c a megabyte in November 2017, had been “working pretty consistently” in recent years to encourage customers to use data bundles. It was also largely prepared for the new regulations, he said.
“We’re in reasonable shape. In markets where we’ve very aggressively brought the out-ofbundle rate down, we’ve discovered that the recharges are very resilient and so in other markets it’s not had such a big impact,” Shuter said.
In 2015, Nigerian regulators had made a similar move to Icasa’s by ruling that consumers would have to opt into out-ofbundle rates.
“That gave us a couple of weaker quarters and then the in-bundle [offering] came through and passed the total revenue of where we’d been a couple of quarters before, so we do believe the situation is manageable and we’ve made the moves we need to.”
While there were uncertainties about how the new rules would affect usage, MTN saw “a lot of headroom for growth in data” in SA, Shuter said.
“We see relatively low penetration of active data customers on the total base, we see relatively low levels of utilisation and very little Wi-Fi substitution outside of the main metros.”
Lower out-of-bundle rates
THE RECHARGES ARE VERY RESILIENT AND SO IN OTHER MARKETS IT’S NOT HAD SUCH A BIG IMPACT
had not weighed materially on MTN’s revenues in the three months to March, Shuter said.
“Generally, money has come through in other categories so I don’t think we would say it’s made a significant impact on [revenues],” he said.
Service revenues in SA grew slower than expected in the first quarter, though margins grew. The local business increased service revenues 2.5%, while margins lifted 150 basis points compared with a year before.
Imtiaz Suliman, portfolio manager at Sentio Capital, said the South African revenue result was “a bit weak”, although the growth in prepaid and postpaid subscriber numbers would likely boost revenue growth in future quarters.