Business News of Monday, 24 July 2017
MTN Group has redefined who an active subscriber is and that has led to MTN Ghana deleting a whopping 3.4 million inactive lines from its network in the first quarter of 2017 alone.
Within the same quarter, however, MTN Ghana gained over 800,000 new active customers, and the net effect is a drop in subscriber base by 2.5 million, leaving the telecom leader with 16.9 million plus active voice subscribers, according to the National Communications Authority’s 90 day voice subscription reporting ending of April 30, 2017.
On the data front, the country realized a total of 19,697,062 subscribers in February, before MTN deleted the lines; and after the deactivation, it still increased to 21,584,899 in April.
Impact on penetration
So with the huge drop in MTN’s active subscribers, general mobile cellular subscriptions, which was 39,234,216 in February 2017, dropped to 35,780,667 in March, and increased slightly to 35,984,280 in April.
As a result, between February and April, cellular penetration has dropped from 139 per cent plus, to 127 per cent at the end of April 2017. That is a 12 percentage point drop.
MTN’s own voice market share has also dropped from 51.65% to 47.16%, but it still maintained its comfortable lead on the local market. Its data subscribers has however increased from 11 million plus to over 12 million within the period.
Corporate Services Executive of MTN Ghana, Cynthia Lumor
Corporate Services Executive of MTN Ghana, Cynthia Lumor has been explaining to Adom News that the group redefined an active subscriber to exclude numbers that only subscribe to value added services (VAS) but could not be billed because for months there is no airtime on those numbers to allow billing.
“Those lines had for many months not generated any revenue for company but remained on the rework and were counted as active subscriptions because initially we were billing them for the VAS subscription on them.
“But over time the billing for the VAS subscriptions has been 0.00 consistently so per our new definition of who a revenue-generating subscriber is, we have had to remove those numbers from our network and start the process of reassigning the numbers,” she said.
Cynthia said the significant drop in MTN’s subscriber base is therefore not because subscribers left the network, but rather because MTN itself has streamlined the parameters on who active subscribers are.
She said the company goes through a painstaking process, including paying money to acquire phone numbers from the industry regulator, National Communications Authority (NCA), and they are required by law to manage the numbers well because phone numbers are a finite resource.
“The standard rule is that if a number remain inactive for up to five months without generating any revenue either by making or receiving calls, using data or VAS that number would automatically be churned and reassigned,” Cynthia. Lumor said.
The deletion of those numbers is therefore part of a process of effectively managing the numbers to ensure both MTN and the stated derived maximum benefit from those numbers.
Cynthia Lumor said the company is therefore still monitoring the network closely, and would progressively streamline the system in line with its new definition of active subscriptions,,and also in keeping with the five months standard rule.
Meanwhile, at the MTN Group level the cancelation of 3.4 millions in Ghana led to a 3.6 per cent decline in subscription across its West and Central Africa (WECA) region, which comprise of eight countries.
Cynthia Lumor, however stated that the deletion of 3.4million lines on MTN did not affect its revenue in anyway because those lines were not even revenue-generating lines anyway.
She said the Group Q1 2017 Report showed MTN Ghana saw significant growth in revenue and it rose to number three in terms of size and performance in the Group, falling behind only Nigeria and South Africa.
Revenue growth for the quarter was largely dependent on data revenue, which saw a significant 56 per cent growth over the period; and the strong showing of MTN mobile money in terms of revenue generation.
Reporting and verification
Acting Director-General of NCA, Joseph Anokye
Telcos have often been accused of keeping and counting millions of inactive numbers on their networks just to shore up their subscription levels for marketing purposes.
The NCA has always claimed it verifies the figures telcos report to ensure they only report active and revenue generating numbers.
But this one act by MTN raises questions as whether all other telcos are actually reporting only active revenue generating numbers or they keep throwing in inactive numbers to create the wrong impression about the actual cellular penetration level in the country.
It also raises questions as to what kind of verification the NCA does before publishing the figures telcos report.