MTN has set a target of 9 million new subscribers by the end of the year, up from the previous 8.07 million, as early signs indicate a turnaround in the mobile network operator’s key markets.

The greater number of new customers are expected to come from Ghana, Iran, Uganda and South Africa. In Nigeria, however, the group has lowered its forecast to 120,000 new subscribers by the end of December, from 800,000, largely as a result of changes in the way it accounts for active subscribers.

MTN Nigeria has also faced a difficult operating environment in recent years as a result of economic conditions and changes to subscriber registration rules that have forced it to disconnect millions of subscribers.

During the quarter to September, MTN Nigeria’s customer numbers grew 2.5% to 60.4 million, lifted by the reconnection of customers. However, subscriber growth was negatively affected by the exclusion from its base of 3.1 million active subscribers, owing to a change in subscriber accounting rules “where we no longer account for subscribers whose activity was based on the receipt of a bulk SMS,” said executive chairman Phuthuma Nhleko.

The Nigerian operations limited revenue declines to 1.2% after reporting a year-on-year decline in revenue in the first and second quarter of 2016 of 6.2% and 3.3%, respectively.

Peter Takaendesa, a senior analyst at Mergence Investment, said Nigeria remained a concern for now because of the continuing investigation into the alleged repatriation of funds. A related order by the Central Bank of Nigeria to suspend cash repatriation could affect MTN’s performance if it remained unresolved for an extended period.

“The weaker economy, as well as significant currency weakness, are also likely to delay any benefits of the restructuring efforts in Nigeria. However, at the current share price, we think the market is not putting any material value on the MTN Nigeria operations,” he said.

MTN is being accused of illegally repatriating $14bn out of Nigeria. The Central Bank of Nigeria has instructed the banks to suspend any remittance of dividends.

MTN has since denied the allegations that it had improperly repatriated funds from Nigeria.

Nhleko said MTN Nigeria would “strongly defend any action that would be prejudicial to its interest.”

Momentum SP Reid analyst Sibonginkosi Nyanga said MTN had indicated a minimum dividend of R7 for the 2016 financial year to provide some comfort to investors.

“We are still waiting for management to respond to us on the impact the latest CBN [Central Bank of Nigeria] action to suspend any remittance of dividends will have on the minimum dividend of R7 per share.”

MTN group reported a 0.9% increase in subscriber numbers to 234.7-million during the three months to September across its 22 operations. Voice and data traffic rose 1.8% and 142% respectively year on year. MTN SA reported a marginal decline of 0.5% to 29.7-million.

MTN group had established a dedicated transformation office focusing initially on SA and Nigeria to “maximise revenue growth” and “ensure operational efficiencies”, Nhleko said. It had set “hard targets” for the next 12, 18 and 24 months.

“The executive chairman is clearly making solid structural changes to position the business well for a turnaround,” Takaendesa said.

MTN Group’s new CEO Rob Shutter will assume his duties in March 2017.

•Text courtesy of Business Day (South Africa). Photo shows MTN Executive Chairman Phuthuma Nhleko.

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