MTN Group Ltd. subscriber numbers fell during the first quarter as disconnections ordered by the federal government, its biggest market, curbed the growth of Africa’s largest wireless operator.
MTN’s customer base decreased by 1.4 percent to about 229 million across 22 countries in the three months through March, compared with the previous quarter, the Johannesburg-based company said in a statement.
The company cut its guidance for the full year to 11.95 million net additions from 12.5 million.
“In order to mitigate any future regulatory challenges, the group took an exceptionally conservative stance by disconnecting all subscribers who could possibly be deemed to be non-compliant,” Executive Chairman Phuthuma Nhleko said in the statement.
“This has had a significant unfavorable impact on total subscriber growth and revenue” in the first quarter.
MTN was fined a record $5.2 billion in Nigeria last year for missing a deadline to disconnect subscribers, whom the government had deemed unregistered amid a crackdown on security. The company is still in negotiations about settling the penalty, which was later reduced to $3.9 billion. Nhleko returned to the company he used to run in November to handle the dispute after Chief Executive Officer Sifiso Dabengwa resigned.
“We expected a drop in subscribers in Nigeria during the first quarter, even though the drop was bigger than expected,” Arqaam Capital analyst Tibor Bokor said by phone from Dubai. “We expect that numbers in Nigeria will improve during the second quarter, as the political landscape has changed in the country.”
MTN Nigeria subscribers decreased by 6.9 percent after 4.5 million customers were disconnected in February. In South Africa, the company’s second-largest market, customer numbers fell by 1.7 percent.