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MTN set to activate turnaround plan

By News Express on 08/08/2016

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MTN SA will spend more than R300m on a revamp of its 430 stores as part of a turnaround plan for the business, which reported weaker results for the six months to June.

The aim is to digitise the stores to enable customers to do self-service, and to respond faster to queries.

The investment is part of the R11bn set aside for capital investment in SA where subscriber numbers declined by 2.6% to 29.8-million in the half-year to June. Margins declined by 5.5 percentage points to 30.1%.

MTN SA is targeting a total of 1.1-million new subscribers by the end of the year.

“We are digitising processes that used to be manual. We want to eliminate queues at our stores and be more customer-centric,” said CEO Mteto Nyati.

“We will be a very responsive and agile company and putting (in place) systems that will help us respond immediately to customer needs and competition.”

In recent months, MTN experienced network outages that left subscribers without voice and data services.

The group outsourced part of the network management and retained some functions. That created challenges and confusion around responsibilities, said Nyati. The company has since defined clear roles and responsibilities and since then, “We haven’t had network outage since the first quarter.”

Overall, MTN group reported headline loss per share of 271c, dragged down by among other things the Nigerian fine, losses from digital businesses, foreign exchange losses and poor performance from its two biggest operations – Nigeria and SA.

MTN agreed to pay a fine of 330-billion naira ($1.7bn) for missing the deadline to cut off millions of unregistered subscribers. The fine, to be paid by the Nigerian unit, has wiped out profit from that business for the half-year to June. MTN has operations in 22 countries.

Executive chairman Phuthuma Nhleko said the performance reflects the confluence of a number of issues, “which created the perfect storm”.

Despite the disappointing performance, MTN declared a dividend of 250c, less than it paid a year ago. It expects to pay a full-year dividend of 700c. But this may increase if operating conditions improve materially.

MTN Group executive of investor relations Nik Kershaw said while earnings were lower, the business remained “solid and the dividends will be financed through group cash resources”.

Kagiso Asset Management investment analyst Aslam Dalvi expected some improvement in SA and Nigeria, but the operating environment remained “very challenging from a macroeconomic, regulatory and competitive point of view”.

He said Nigeria was a large market and near-term results would also be affected negatively by the more than 50% depreciation of the naira this year.

Nhleko said MTN was in the process of “a deep and fundamental strategic review of its operations and processes to ensure it is operating far more optimally given the pressure on voice revenues, evolving customer needs for high-quality data and more complex … market environments.”

The group expects to add a total of 8.1-million new customers by the end of 2016.

•Source: Business Day South Africa.

Source News Express

Posted 08/08/2016 1:22:29 PM


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