Intrepid MTN faces tricky challenge in its backyard
Shareholders have learned to enjoy the ride, too, and it’s now rare to hear much doubt expressed when MTN picks on a war-torn country and decides it would be fun to set up a network.
As Frost & Sullivan analyst Spiwe Chireka says, its risk-taking attitude is a significant competitive advantage as its aggressive moves successfully take it into markets shunned by other operators.
“They have managed to thrive in challenging markets such as Nigeria, where other operators have failed. It is this willingness to go where no one else is willing to go that puts MTN apart from its competitors,” he says.
Sudan is MTN’s latest risky undertaking. Conflict has seen several global firms withdraw, but MTN sees this vast, untapped market as a huge opportunity.
MTN’s Middle East and north African operations are its fastest- growing territories because of their almost complete lack of cellphones. The challenges include regulatory uncertainty and tough terrain where physically rolling out a network is a mission.
SA has different challenges, and MTN may attempt an entirely different but equally tricky manoeuvre. SA’s telecoms market is a mess. Half-baked state-owned entities are doing little to ease the bandwidth shortage, and Telkom still reigns supreme. Yet Telkom is in a pickle, with its 50%-owned subsidiary Vodacom proving a reluctant partner to Telkom’s aim of offering a united range of fixed, mobile and data services.
Vodacom wants Telkom to sell its stake to UK-based Vodafone, which owns the rest of its shares.
So contemplate this idea posed by an analyst: Telkom sells its Vodacom shares to Vodafone. That leaves Telkom’s fixed-line assets, which MTN then buys. That gives MTN the backbone to link its base stations and to provide fixed-line and high-speed data services to corporate clients.
Telkom would be an empty shell, holding a truckload of money to be paid out to its shareholders, including the government. As well as pocketing that cash, the government could boast that selling Telkom’s assets to the private sector proves how proactive it is in liberalising the market. Which it would be, if you ignore its meddling in Infraco, Neotel and Sentech.
Meanwhile, Telkom becomes a subsidiary of MTN, giving the sluggish parastatal a smart kick up the bum in the customer services and competition stakes.
Far-fetched? Perhaps. But as MTN has proved countless times, anything can happen in the telecoms sector.
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