MTN results reflect slower expansion
MTN chief executive Phuthuma Nhleko quipped, during his results presentation, that the company is up “on the radar screen” of state regulators.
At the firm’s interim results briefing on Thursday, he outlined how revenue was being put under pressure by the various industry regulators across its 21 markets. “We are trying to have constructive engagement with regulators. We can’t be caught off guard,” he said.
The company’s 35% growth rate was a shadow of its 69% jump last year.
In Sudan, the company had to disconnect more than a million subscribers who hadn’t registered personal information.
And in Nigeria, the company’s biggest market, MTN was forced to pay over R213-million in fines for a congested network.
Congestion has also been a problem in Iran (an operation that was launched last year), where subscriber numbers are already nearing South African levels.
The company hopes that it will be able to meet supply constraints through its R30-billion capital expansion programme.
But just R10-million has so far been spent in rolling out networks in markets such as Sudan, Iran, Ghana and South Africa.
With the opening up of the SA industry through Icasa’s licence conversion process, the company’s revenue could come under further pressure from increased competition.
Lindsay McDonald, an ITC analyst at Frost and Sullivan, said MTN’s aggressive expansion would place the company in a good position once worldwide deregulation of the industry brought more competition into its markets.
She said: “MTN hasn’t experienced the massive geographical expansion characterising its last reporting periods, but that certainly doesn’t mean it’s not been active.
“The company has targeted acquisitions that will complement its existing service offering. The deals concerning iTalk Cellular in SA and Verizon Business in various African states are examples of this,” McDonald said.
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