MTN seeks to ease reliance on SA, Nigerian markets (South Africa)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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