Big demand stresses MTN
Africa's biggest cellphone network provider, MTN Group, has doubled this year's capital expenditure (capex) to R30 billion as the demand for its services outstrips supply. MTN operates in 21 countries. It expects a leap in subscribers this year to 83 million from 61.3 million.
Chief executive Phuthuma Nhleko said yesterday the "demand is outstripping our capacity, so 2008 will be a very large capex year so that we don't find ourselves losing out on this growth". The money would be allocated to areas that urgently needed network infrastructure upgrading such as South Africa, Nigeria and Ghana. Iran, which had grown at a fast rate since its launch in 2006, would be allocated funds.
IranCell had 6 million customers at the end of December. In South Africa, MTN will focus on laying its own fibre cable in metropolitan areas to improve the capacity and quality of mobile transmission and to manage margins.
Nhleko said Nigeria and Iran had record rollouts of base stations but they were still not meeting full demand. The company had had high network congestion problems in Nigeria, which had led to the regulator refusing to let the cellphone operator promote some of its products because of poor quality of service. MTN had been ordered to pay back $1.50 (R12) to every subscriber as a penalty for poor service, said research firm Frost & Sullivan.
Spiwe Chireka, an analyst at Frost & Sullivan, said: "Network upgrades and capacity expansion should be carried out … if the company is to avoid further complications such as they had in Nigeria. Frost & Sullivan believes it is only a matter of time before other regulators across the continent follow Nigeria's example, and MTN must be prepared."
Group total net profit for the year to December was unchanged at R10.61 billion because of the end of a five-year tax holiday in Nigeria. MTN's tax charges increased by R5.2 billion to R7.79 billion in the year.
Total subscriber numbers jumped 34 percent to 61.3 million. MTN's biggest market, Nigeria, increased customers by 34 percent to 16.5 million. Most subscriber growth came from prepaid subscribers.
MTN shares gained 4.34 percent to R132.50. The telecoms sector rose 0.57 percent.
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