MTN, one of South Africa’s largest mobile network operators, has released its financial results for the first half of 2024. The results show a significant increase in data consumption among its customers, but surprisingly, this surge in usage has not translated into proportional revenue growth for the company.
On the one hand, MTN’s postpaid customers are using more data than ever before, with average usage increasing by 51% to 21.9GB per month. Prepaid customers are also using more data, with average usage rising by 9.9% to 3.1GB per month. This increase in data consumption is a positive sign for MTN, as it indicates that more customers are relying on its network for their data needs.
On the other hand, MTN’s revenue growth has been much more modest. Overall data revenue grew by just 2.4%, with postpaid service revenue increasing by 3.2% and prepaid service revenue growing by only 0.6%. This discrepancy is particularly noticeable in the prepaid segment, where a 36.5% increase in data traffic resulted in just 0.6% revenue growth.
So, why is there a disconnect between usage and revenue? According to MTN, much of the postpaid data consumption increase can be attributed to its fixed network access business, which offers high-data packages at competitive rates. Additionally, economic pressures are limiting out-of-bundle spending among postpaid customers. Finally, MTN’s CEO Ralph Mutipa acknowledged that prepaid data prices were too low to significantly impact revenue despite increased usage.
To address this issue, MTN has implemented price increases for prepaid data towards the end of the second quarter. The company hopes that this will improve growth in the second half of the year. MTN also recognizes the need to refine its pricing strategy for fixed wireless access services, which are seeing strong demand but not translating effectively into revenue.
This situation highlights a broader challenge in the telecommunications industry: balancing the need to provide affordable data services with the imperative to generate sufficient revenue for network maintenance and expansion. As data consumption continues to grow, operators like MTN must find ways to monetize this increased usage without pricing out customers.
While MTN South Africa has successfully grown its subscriber base and seen impressive increases in data consumption, the company now faces the task of aligning its pricing strategies to better reflect this usage. The coming months will be crucial as MTN implements new pricing models and assesses their impact on both customer behavior and revenue growth.
