(Adds detail, analyst's comment.)
By Robb M. Stewart
Of DOW JONES NEWSWIRES
JOHANNESBURG -(Dow Jones)- MTN Group Ltd. (MTN.JO), Africa's largest cellphone network operator, Thursday said its subscriber base increased by 5.1% during the third quarter despite a drop in customers in its home South African market.
There are "challenges" to achieving a revised target of flat subscriber base in South Africa this year compared with last, the Johannesburg-based firm said.
MTN recorded almost 108.5 million subscribers across its operations in Africa and the Middle East at the end of September, an increase of 20% since the start of the year, it said. MTN topped the 100 million subscriber mark in April.
Subscribers in South Africa, where MTN is the second-largest operator behind Vodacom Group Ltd. (VOD.JO), fell by 4.7% to 16.4 million from the end of September, the company said. It attributed the decline to the introduction earlier in the year of a new communications act that requires even pay-as-you-go users to be registered.
Vodacom made its debut on the Johannesburg stock exchange in May after U.K.-based operator Vodafone Group PLC (VOD) bought an additional 15% stake to take its interest to 65%.
MTN said that while it still expects to achieve its target of adding 22.6 million subscribers in 2009, it expects net subscription growth in South Africa to be flatrather than the 500,000 additions forecast in August. It expects to add 550,000 customers in Syria, compared with 400,000 predicted previously.
In Nigeria the number of subscribers rose 5.2% on the quarter to 27.3 million, and in Iran the number increased 7.9% to 19.2 million. MTN operates in 21 markets, and said it has now gained the No. 1 position in Afghanistan after starting the year as the No. 3 operator.
"While there has been a drop in the subscriber numbers in the South African operation, there is no need to be too concerned about this," as it is clearly an effect of the Aug. 1 implementation of the new communications act, said Spiwe Cjireka, an analyst at consultancy Frost & Sullivan.
At 1245 GMT, MTN's shares were unchanged at 118 rand, underperforming a gain in the wider market. Shares in Vodacom were 0.4% lower at ZAR54.65.
Company Web site: www.mtn.com
-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com