MTN seeks to ease reliance on SA, Nigerian markets
South Africa and Nigeria continue to lead the pack in terms of the MTN Group’s operations, with 13,4-million and 14-million subscribers respectively, but CEO Phuthuma Nhleko said on Wednesday that he would like to see revenue and earnings contributions more evenly spread across each of the telecoms group’s three primary regions.
The company has operations in the South and East Africa region, in the West and Central Africa region and in the Middle East and North Africa.
For the six months ended June 31, Nhleko commented that market share in South Africa had remained relatively stable. He added that lower denomination airtime vouchers had stimulated usage and had a positive impact on bringing dormant users back into action.
“Average revenue per user (ARPU) in the postpaid segment decreased to R435 from R487 in December 2006 and prepaid ARPU decreased to R87 from R94, both decreases owing to continued penetration into lower-usage segments,” MTN explained in a statement.
Nhleko said that realigning the country’s distribution strategy was “key to retaining market share, and growing it.”
The roll-out of 3G in South Africa was also gaining momentum, the company said, with a total of 1 152 3G sites compared with 793 in December 2006, which lead to an increase of 58% in data revenue.
MTN intends to roll out more 3G sites by the end of the year.
The group launched in South Africa in 1994, and currently has a market share of 35% and a penetration of 81%.
The West and Central African (Weca) region, which includes, among others, Nigeria, Ghana, Cote d’Ivoire, Cameroon and Benin, had the highest revenue for the group and was the biggest contributor to earnings before interest, tax, depreciation and amortisation.
RISK AND REWARD
Nhleko said that MTN was not looking to merely retain its market share in the region, but rather to increase the market size to 52-million subscribers by 2011.
“MTN’s aggressive penetration into markets shunned by other operators is the group’s most significant competitive advantage,” said global growth consultancy Frost & Sullivan.
It added that the company’s position as a “risk-taker” continued to show rewards.
“They have managed to thrive in challenging markets such as Nigeria where other operators have failed to survive,” commented research analyst Spiwe Chireka.
“It is this ability or willingness to go where no one else is willing to go that puts MTN apart from its competitors,” he said.
Ghana recorded an increase of 31% in subscriber numbers for the period, and now boasted 3,4-million subscribers compared with 2,6-million in September 2006.
Market share in the country increased from 52% in December last year to 54%for the six months ended June 31.
In the Weca region, Nhleko noted that Benin remained a challenge, owing to what he called “inappropriate demands” from local authorities and regulators. The network in Benin was suspended on July 12.
Looking to MTN’s Middle Eastern and North African operations, Syria boasted the most subscribers with 2,6-million for the period, compared with 2,2-million subscribers in December last year.
MTN Irancell, which had a soft launch in October last year, with prepaid services only effective as of January, saw significant growth. During the period, MTN Irancell recorded net additions of 1,8-million subscribers, with 3,2-million active subscribers recorded in August 2007.
The company said that the network had been enhanced and now had the capacity to service 6,5-million users.
Nhleko noted that the operations in Iran had grown to about 25% of the 13-year-old South African operations in just eight months.
He added that he believed there was an opportunity to enjoy significant growth over the next three to five years in the Middle East and North Africa region.
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MTN leads prepaid market (South Africa)
Network operator’s subscriber numbers increased to more than 48million in 21 countries.
MTN seems to be gaining on Vodacom in the prepaid market — but is losing in the contract market, where Vodacom has been quicker to roll out wireless broadband.
Subscriber numbers in the 21 countries where MTN operates cellphone networks grew 20percent to more than 48 million since December, MTN’s interim results for the six months ended June showed.
South African subscribers grew 7percent to 13.4 million. MTN chief executive officer Phuthuma Nhleko said much of this growth came from attracting prepaid users by offering lower-denomination vouchers.
Prepaid users account for 82percent of MTN’s domestic customer base. The average revenue per user of its prepaid customers decreased to R87 in June from R94 in December. Despite this decline, MTN still beats Vodacom’s prepaid user average of R58 a month.
In the contract market, however, Vodacom averages R488 while MTN posted a decline to R435 from December’s R487.
While MTN has invested in expanding into Africa, Vodacom has focused on keeping its lead in the domestic market by being the first to the market with wireless Internet access technologies.
An impending competition tribunal hearing in connection with R200-million in interconnection fees with Cell C has cast a shadow over MTN’s local ambitions.
Nhleko said: We are way under- spent in South Africa compared to our budget.
We experienced huge pressure from increased market demand, especially in South Africa and Nigeria, but we have approved capital expenditure for R 4.4-billion compared to R5.6-billion in Nigeria.â€
The group’s total revenue increased by 69percent to R34-billion. Most of this growth came from outside of South Africa, where revenue rose 15percent to R13-billion. Revenue increased 51percent to nearly R10-billion in Nigeria.
Renaissance Specialist Funds portfolio manager Khulekani Dlamini said the MTN results were better than expected.
He said: The market was expecting R3.11 in earnings per share for the half year and the company delivered R3.25.â€
2Connect to connect the nation (Bahrain)
Bahrain-based alternative telco 2Connect is awaiting approval from the Telecommunications Regulatory Authority (TRA) to install a fibre-optic network across the country to break the monopoly of incumbent Batelco in the facilities-based fixed line market. ‘Right now we are using Batelco’s phone lines because we don’t have a choice,’ said 2Connect’s managing director Fahad Al Shirawi, adding that ‘While we still use Batelco’s phone lines we can never be a contender.’ The first phase of the planned project is expected to cost more than BHD400,000 (USD1 million) and will involve the laying of over 40km of fibre-optic cable, starting in Manama and going south through Seef and Muharraq.
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Subscriber growth helps boost Cosmote profits by 24.6% (Greece,Romania,Bulgaria,Macedonia)
Greek mobile group Cosmote reported a 24.6% year-on-year rise in net income in the second quarter, to EUR101.6 million (USD138.6 million), helped by strong subscriber growth, the effects of its takeover of the Germanos retail chain in Q4 2006 and forex gains. Revenues for the three months ended June 2007 climbed 36.6% to EUR738.4 million, and EBITDA improved by 22% percent to EUR248.4 million. Cosmote operates in five countries: Greece, Albania, Bulgaria, Macedonia (FYROM) and Romania, through its respective units Cosmote Greece, AMC, Globul, Cosmofon and Cosmote Romania respectively. Total net subscriber additions in Q2 2007 reached 870,000 to give it a total of 13.1 million customers at the end of June 2007, a 39.4% increase from a year ago and on track to exceed a target of 15 million in 2009. The retail network of Germanos was the driving force behind much of the growth, accounting for around 63% of total net subscriber additions (excluding Albania) in Q2 2007 compared to around 38% a year before. Romania had the highest number of new additions at over 350,000, whilst Cosmote Greece added over 250,000 customers. Cosmofon in FYROM added 18,000 new subscribers in the second quarter to end June with 515,785 users.
Cosmote reported 37.5% year-on-year consolidated revenue growth for the first half, and H1 profit growth of 12.5%. Overall, international revenues in H1 2007, accounted for approximately 31% of group revenues (excluding Germanos), within targets set by the firm in 2005 (30%-35%), despite domestic operations continuing strong revenue growth throughout the period and Romanian operations still being in an early development phase. Total group CAPEX reached approximately EUR219 million in H1 2007. Romania accounted for around EUR84 million of the investment as it continues investing heavily to expand its network capacity. Greece absorbed EUR65 million and Bulgaria a further 37 million. Group net debt stood at EUR2.5 billion at the end of June, following a dividend payment of EUR244 million at the end of the month.
Saudi WiMAX contract won by Huawei (Saudi Arabia)
Chinese network technology provider Huawei Technologies announced yesterday that it has been selected by Saudi Telecom Company (STC) to build a WiMAX 802.16e network to provide wireless broadband coverage of major Saudi cities including Jeddah, Riyadh and Dammam. Huawei has been contracted to design and install a network including base stations, gateways and management systems. ‘We enjoy a longstanding relationship with Huawei cooperating on different technology fields such as GSM and W-CDMA,’ said Bandar M. Al Qafari, general manager of STC’s Network Department, in a statement. ‘Huawei has the experience and technology advantages in the WiMAX field, and its WiMAX 802.16e solution enables the next generation network evolution,’ said Bandar Al Qafari, who continued: ‘Huawei has successfully delivered more than 5,000 wireless projects, and I’m confident that it will provide us with an excellent network that will allow us to provide wireless broadband access service to our subscribers.’
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Government has USD16 million to spend on rural telecoms (Côte d’Ivoire)
The Cote d’Ivoire National Telecommunications Fund (NFT) has so far raised more than USD16 million to finance telecoms operations in the country’s rural areas.The president of the board of management of NFT Ahoutou Koffi announced that the fund is now ‘operational’ through an initiative of the Economy & Finance and ICT ministries begun in April 2006, and is ready to contribute to the development of the telecoms sector. ICT Minister Ahmed Bakayoko stressed that the fund must also equip schools and hospitals with ICT infrastructure alongside the rollout of rural networks.
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ZTE inks Tunisian network deal (Tunisia)
Chinese vendor ZTE has signed a contract with Tunisie Telecom to deploy a national transmission network in Tunisia. Under the contract, ZTE will deploy infrastructure covering nearly two-thirds of the country, including all developed coastal regions. Upon completion, the network will allow incumbent Tunisie Telecom to offer transmission channels for mobile, ADSL and other services, and will establish a solid foundation for the telco’s future development.
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China Telecom 1H profits down amid higher competition (China)
China’s largest fixed line operator by subscribers China Telecom today reported a 4.8% fall in net income in the first half of 2007, as increased competition from the likes of domestic mobile rivals China Mobile and China Unicom slowed overall subscriber growth. The fiscal first-half performance was also adversely impacted by slower sales of broadband services which failed to fully offset a decline in voice calls. China Telecom said net income dipped to RMB13.48 billion (USD1.8 billion), from a restated RMB14.16 billion for the corresponding period of 2006. Revenues including connection fees for fixed line services climbed 1.5% from a restated RMB87.3 billion to RMB88.6 billion. The company reported an EBITDA margin of 51.2%. Excluding amortisation and upfront connection fees, net profit rose 1.3% to RMB11.81 billion, but below market expectations of growth in profit from continuing operations of 2%-3%.
China Telecom said sales of fixed voice services fell 6.9% to RMB57 billion, impacted by Chinese mobile operators introducing promotional packages offering free incoming calls, which cut into the telco’s traditional user base. Ten times as many Chinese signed up for wireless services than for fixed lines during the first half of 2007, lured by the lower rates being offered by China Mobile and China Unicom. Fixed line voice call ARPU slumped by 10.7% to RMB42.5, although the company reported that revenue from non-voice ARPU covered the loss, yielding an overall ARPU of RMB66. To bolster its subscriber base in the short term, China Telecom has applied for a licence to offer 3G wireless services, and is also increasing its focus on internet and data. ‘We further expanded our internet access, value added and integrated information services, so that our non- voice businesses emerged as the new revenue drivers,’ chairman Wang Xiaochu said in a statement. Turnover from internet services climbed 31% year-on-year from RMB11.20 billion to RMB14.64 billion thanks to sustained demand for broadband services. CAPEX was RMB20.44 billion, down 1.6% y-o-y.
The telco has no idea when the government will issue 3G licences but Wang says it has invested RMB600 million to date to develop its home-grown 3G mobile standard based on Time Division-Synchronous Code Division Multiple Access (TD-SCDMA) technology. Further testing however, is being hampered by the lack of availability of handsets.
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Vodafone cuts users’ downtime (UK)
Vodafone UK has announced that it is upgrading the maximum download speed on its 3.5G HSDPA mobile network to 7.2Mbps, offering typical download speeds of 1.7Mbps-5.5Mbps, whilst upload speeds will rise to a maximum 1.44Mbps, using HSUPA technology. Compatible user devices will be available from 3 September. These include a tri-band USB modem and two ‘ExpressCard’ wireless data cards. The first phase of the network upgrade will cover central London and major airports, and rollout will continue through the autumn in other areas.
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PCCW H1 turnover up 7%; profit rises 3% (Hong Kong)
Hong Kong-based fixed line, mobile and broadband provider PCCW’s first half 2007 net profit rose 3% year-on-year to HKD822 million (USD105 million) from HKD796 million a year ago, driven by a 7% year-on-year increase in revenue from telecoms businesses to HKD9.51 billion. The figures were supported by a return to revenue growth from its local data and international calls businesses, whilst sales from fixed line operations were stable at HKD2.3 billion. Earnings before interest, taxation, depreciation and amortisation (EBITDA) from telecoms operations rose 4% year-on-year to HKD3.07 billion. PCCW’s NOW broadband IPTV service increased its subscribers by 35% year-on-year to 818,000 at the end of June 2007.
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