MTN Quarterly update - Data on the Rise

Yesterday MTN released their quarterly report, which the market received favourably. The stock closed up over 4%. They increased their revenues in all major regions, something you want to see as a shareholder.



Looking at South Africa, revenue was up 3%; data was up 12.5%, but voice was down 8.4%. This trend is to be expected in more developed markets though, the key for MTN is to have their data revenue grow quicker than voice revenue falls.

Despite the hostility toward MTN in Nigeria, the region had a very strong quarter. Data revenue increased by 52% and voice revenue increased by 21%, driven partly by an increase in subscribers. The biggest victory for the Nigerian business was the Nigerian Naira holding steady for the year.

The Iran business was not so lucky. The official exchange rate has depreciated by 22% over the last year, and from what I understand, it is even weaker on the black market - the true value? Data revenue in the country was up 40%, voice revenue was down 5% and overall revenue was up 14%.

The group increased their subscribers by 2.5 million to 225 million. That is a lot of people! Across most of their regions, they increased Average Revenues Per User (ARPU's) in local currencies, showing operational execution is on form.

MTN's problem at the moment is the local currencies. They are increasing subscribers, and increasing the amount each subscriber spends, but then when you convert those revenues and profits back to hard currency, it is worth less than the previous period.

As you can see, the common trend in the above numbers is the exponential increase in spending on data. That is the reason to own this stock, 225 million people all spending more on data each year.