MTC reports remarkable business growth as recorded in the key performance indicators: customer growth of 743.509 (+33.8%); revenue rise to 1.117,9 million NAD (+18.4%); and EBITDA growth of 583.6 million NAD (+2.7%).
The CAPEX invested was a whopping 339.9 million NAD (+81.1%) signalling our commitment to the long-term growth of the business.
The market
In the last year, the Namibian market has shown significant upward developments in the penetration rates. MTC is proud to have reaped the fruits of seeds sowed by consistently providing coverage in areas deemed uneconomical and unprofitable by many an analyst.
The commencement of business by a second mobile operator created the right stimulus for market growth and we are continuously experiencing significant increase of our active subscriber base.
The marketing efforts now come from two operators, resulting in increased awareness of the mobile market and its offerings.
The company
In June 2007, MTC opened the new head office facilities in the Olympia suburb of Windhoek. This was a great moment for the MTC employees because having all the departments under one roof also results in increased interdepartmental communication, ensuring provision of improved service to our customers.
Regulatory environment
On the regulatory front, we have had some surprises with the introduction of an additional mobile service by the fixed-line operator, Telecom Namibia. This is a controversial development since the government of Namibia sold a 34% stake in MTC to a private entity, Portugal Telecom.
The sale took place with the understanding that there will only be two mobile operators in the Namibian market for the next few years.
Also, during the period under review, the Namibian government decreed that a 15% VAT be levied on the airtime sold to prepaid customers. It was an unpopular decision but one that was implemented by all players.
A draft telecommunications bill is under review and MTC calls on the government to pass that into law in order to create certainty in the market.
While total revenue grew by 18.78% to N$1,117 million (2006: N$944 million) compared to the previous financial year, profit from operations increased by only 1.8% N$493.5 million (2006: N$484,7 million), due a notable rise in certain costs.
Subscriber growth
These results have been achieved as a result of a robust focus on customer retention and growth. The key revenue driver was the subscriber numbers which stood at a total base of 743 509. The number of postpaid base grew by 38% from 48 286 (2006) to 66 678 and prepaid by 33.44% from 507 215 (2006) to 676 831.
EBITDA
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased in monetary value from N$568,1 million (2006) to N$586,6 (2007) but decreased in EBITDA margin by 7.7%. The decline in the EBITDA margin was mainly as a result of the increase in certain costs, namely:
* Personnel costs
* Sales and marketing costs
* Rise in cost of sales
* Transmission costs
Postpaid
The main contributor to the positive growth of 16% was the increase in subscriber numbers. The ARPU per subscriber decrease by 15.48% as a result of penetrating the lower ARPU base and the strategy to convert high prepaid customers to postpaid subscribers.
Prepaid
An increase of 24.8% was accounted for during the year under review mainly as a result of the growth of the prepaid subscriber base. The prepaid ARPU decreased by 27.6% as a result of penetrating the lower income market with lower disposable incomes.
Roaming
Roaming revenue comprises revenue from international visitors roaming on MTC network within Namibia as well as the net revenue of MTC subscribers roaming abroad. Roaming revenue increased by 18.3% mainly as a result of the positive contribution of Namibia as tourism destination of choice.
Interconnect
Interconnect revenue continued a downward trend similar to the previous financial year of 3.8% (2006: 5.45%) as a result of customer behaviour change towards mobile-to-mobile calls.
Changes in inventories of finished goods
Cost of inventories comprising of the following:
* Cost of sales handsets
* Cost of recharge vouchers
* Cost of the free phones altered on the bundle connect packages
The main drivers for the increase were the take up as well as the renewal of postpaid bundled packages.
Direct costs
Direct costs increased at a lower rate in comparison to the previous financial year at 22.5% (2006: 41.7%) largely due to the benefit of a five-year exclusivity contract with the radio network equipment provider.
Sales and marketing costs
Costs rose by 42.8% for the year under review compared to the previous financial year. The main causes of the increase were promotions and advertising due to increased competition within the Namibian telecommunications market for the most part of the year under review.
General and administration
General and administration comprises of the following:
(i) General and administration cost
(ii) Bad debts and provision for bad debts
The policy of the group is to provide for all accounts 90 days and older as bad debts, these amounts accounted for less than 0.5% of turnover.
All capital expenditure is recurred at the exchange rate ruling at the date of acceptance of the equipment. Due to the fluctuations of the Namibian dollar, capital expenditure in any year cannot be properly evaluated without taking the fluctuations into account. The major portion of the capital expenditure was to improved network capacity and required quality improvements as well.
Funding
All projects were funded out of own resources.
Shareholders distribution
Dividends paid per share increased by 206% from 320c to 980c per share.
Corporate social investment programme
To ensure good corporate citizenship, MTC devotes one 1% of its annual total turnover to its social investment programme. During the period under review that amounted to some N$11.2 million.
MTC Foundation
MTC has registered a charitable trust which manages all the community activities or charitable giving of MTC. The foundation annually draws 25% of the total social investment budget from the allocations made for social investment programmes of MTC.
Key focus areas are:
* Community development
* Health
* SMEs
* ICT for development
* Education and skills development
* Arts and culture
* Support for the orphans and vulnerable children
During the year under review, the foundation has supported: Michelle McLean Children's Trust for entrepreneurship development and career guidance to schools, Polytechnic with its Centre for Entrepreneurship development, various drives of the Cancer Association and a day-care centre for less fortunate children from the DRC settlement of Swakopmund. Additionally, the foundation has supported a host of HIV/AIDS programmes nationwide under Hope Namibia and Phillipi Namibia, among others.
Commercial sponsorships
The key commercial sponsorship has continued to be the five-year four million Namibian dollars per annum commitment to the Namibia Football Association (2005-2010) as part of the Namibia Football Consortium. The consortium is a partnership between MTC (50%), FNB Namibia (25%) and Namibian Breweries Limited (25%).
Other main commercial sponsorships are the N$2 million to cricket, golf (N$1 million), rugby (N$2 million). While support is for the national teams on the main, a significant portion of the investment is devoted to the grassroots development of all the codes supported.
Individual sport personalities have also continued to enjoy our support in the names of Agnes Samaria (Professional Athletics), Joe Nawanga (Professional Golf), Jurgens Strydom (Professional Tennis).
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