MTN will hike prices to build more backup power

MTN will pause plans to build new network infrastructure to equip its existing towers with backup power.

This will result in customers paying more for data and voice minutes, the Sunday Times reported, citing comments made by MTN South Africa CEO Charles Molapisi earlier this week.

Molapisi said they are building infrastructure so they can self-provision power.

Of MTN’s 2023 capital expenditure budget of R9 billion, the network operator expects to use up to R2 billion to equip base stations with alternative power sources like batteries, generators, and solar power.

As part of this process, MTN is calling in Huawei and American Tower Corporation to help take most of its towers off the grid. It will also work with IHS Towers — which acquired MTN South Africa’s towers for R6.4 billion last year.

MTN owns a 26% stake in IHS Towers, as per an August 2022 statement.

According to Molapisi, 3,253 sites had been upgraded by the end of February, and 3,606 more must still be upgraded. MTN aims to have this done by the end of May.

Rolling out this backup power will slow MTN’s investment in growing its network infrastructure — including in the crucial and competitive 5G market.

“There is an increased adoption of 5G, though we can’t quickly ramp up the coverage this year as we wanted to,” said Molapisi.

However, he noted that 5G rollout plans wouldn’t be completely paused, and would be reviewed on a monthly basis to see what could be done.

Vodacom CEO Shameel Joosub and MTN SA CEO Charles Molapisi on the left, in a meeting with Minister of Electricity Kgosientsho Ramokgopa

MTN growth

News of MTN’s reduced priority on building new network infrastructure is a disappointing twist in what has otherwise been an excellent March for the company.

It released its annual results earlier this month and reported a 42.8% year-on-year increase in profit across the MTN Group.

This included an increase in MTN South Africa’s revenue and EBITDA of 3.9% and 4.7%, respectively.

MTN said this was impressive given the challenging economic situation in South Africa.

“South Africa faced numerous challenges in 2022, with the economy remaining under significant pressure with the growth outcome for the year estimated to be sluggish at 2.1% (2021: 4.9%),” the company said.

“Inflation averaged 6.8% in the year (2021: 5.9%), exacerbated by the rand which depreciated by 10.5% against the US dollar.”

“The South African Reserve Bank (SARB) hiked interest rates by 3.0pp during the year — with the prime lending rate closing 2022 — at 10.5%, aimed at containing escalating inflation which has trended above the SARB’s target range of 3–6% since June 2022.”

MTN also acknowledged the effect of the 208 load-shedding days in 2022 on its network.

“This put an enormous strain on the MTN SA network, impacting availability as well as some business functions including those supporting recharge and upgrade activity,” MTN stated.

Now read: MTN reports huge profits

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MTN will hike prices to build more backup power