Subscriber numbers from Q1

MTN was on a bit of a tear yesterday. Here it is: MTN Group records 227,5 million subscribers. That is quarter on quarter growth of 4.1 million subscribers. MTN is only 21 years old, as a listed business. The company always measures these updates on a quarter on quarter basis, in other words measures the number of subscribers that they had in the reporting quarter versus the prior one, rather than measuring it year on year.


For instance, if you read the headline number and see that in South Africa the Postpaid segment saw a fall of 0.3 percent subscribers, there is cause for concern. When measured against the prior year however, there are still 200 thousand more. In total, the company has 17 and a half million more subscribers today than they had last year. To put that number into perspective, there are only 63 countries with more than 17 million people, by population that is. The Vatican has only around 850 folks living there, the Cocos islands has 550 and the Pitcairn islands has only 50 odd folks living there. That is the bottom of the list.


We don't live there, MTN does not and never will operate there, the Pitcairn islands. They will operate across the continent, where the average age is very low when compared to the rest of the world, the average wealth (which is evident in the Average Revenue per User numbers) is very low and most importantly the GDP growth rates of Sub Saharan Africa are expected to be higher for longer across most of the region. In other words, to generalise (to paraphrase Morgan Freeman's character in the Shawshank Redemption), and generalising is a dangerous thing, the future of our continent looks bright. Notwithstanding the terrible events of the weeks gone past here in South Africa, notwithstanding the horrible and dreadful attacks on humanity in Kenya and Nigeria. The business may appear mature, and that it may be from a voice point of view, data is growing strong, everyone wants a better handset that uses more data than NASA did in the whole of 1966 (I am making that up), communication is at our core.


We certainly have been patient and long term holders with this company, as private investors we tend to get too itchy, wanting to move too quickly. MTN have paid 21 dividends as a listed company, I remember when they paid nothing for a few years whilst they were in growth mode and then only an annual one, a small one at that. The first interim dividend in this current cycle was declared in August of 2010. Last year the company paid 12.45 Rand in dividends, pre tax of course. Expectations are for a modest 8 percent per annum increase. Ironically, the yield forward looks greater than that of Vodacom, there is a turn up for the books! We continue to hold the MTN positions that we have, they are a superb dividend payer with growth prospects that still require deep investment to keep pace, equally they have good growth prospects.