MTN braced for increasing competition
This means that MTN can expect more intense competition in the markets in which it currently operates.
However, growth consulting company Frost & Sullivan believes that the operator’s corporate culture of aggressive expansion, innovative product offerings (such as one roaming tariff for Africa) and its focus on quality provide it with a continued competitive advantage.
MTN released its interim results today, acknowledging that its subscriber growth was sound in increasingly competitive markets. The group’s subscribers were up by 53% from June 2007, with revenue up by 35% in the
same period. The West and Central African region was the largest contributor to group revenue, providing 46% of the total.
“MTN hasn’t experienced the massive geographical expansion characterising its last reporting periods, but that certainly doesn’t mean it’s not been active,” says Frost & Sullivan ICT industry analyst Lindsey Mc Donald.
“The company has targeted acquisitions that will complement its existing service offering. The deals concerning iTalk Cellular in South Africa and Verizon Business in various African states are examples of this.”
MTN’s actions are in keeping with moves by industry players to position themselves as converged communications providers. It also indicates recognition of the importance of data services, which are set to increasingly contribute to operator revenue going forward.
Recent analysis from Frost & Sullivan estimated that the growth of mobile internet in Africa will be between 40 and 50 per cent over the next two years. This represents significant potential for companies like MTN.
“Frost & Sullivan anticipates increased movement from MTN into the provision of data services, in keeping with the decisions the operator has made in South Africa and Nigeria,” Mc Donald says. “The operator has already extended its investment in fibre optic infrastructure in South Africa from a single project in a high traffic area between Rosebank and Sandton to a national network that will be 5,000 km in length. In Nigeria, MTN is already a fixed and mobile services provider. It is not unreasonable to assume that these are a sign of things to come in other markets.”
MTN’s expertise in emerging markets will continue to be a factor upon which it can capitalise. Geographical expansion remains a strong growth option open to the company, with markets in Latin America and Asia perhaps the most obvious targets.
“The operator’s proven ability to quickly enter a market, establish infrastructure and distribution channels and then launch quality services will stand it in good stead for new market entrances,” Mc Donald says.
She adds that there are also growth opportunities for MTN in the realm of product and service offerings. Acquisitions or strategic partnerships are likely to be the main vehicles for growth in these areas.
Mc Donald believes that the strength of MTN’s corporate culture will ensure that it remains a leading telecommunications company.
“This has been recognised by international players such as Bharti and Reliance, and is one of the key reasons for their interest in investing in the African operator,” she says. “It would seem that MTN’s commitment to
the preservation of its corporate culture and strategic direction is perhaps the common reason for the failure of merger talks with the Indian operators.”
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