Afrihost is in talks with alternative providers of wholesale data because MTN is not prepared to continue providing data to the Internet service provider, which it bought in 2014, at below cost.
“Let me be open about this. Afrihost has been a customer of MTN Business for a long time. We have given them wholesale prices that were subsidised by MTN. We cannot afford to do that going forward,” MTN South Africa CEO Mteto Nyati said in an interview with TechCentral in Johannesburg on Wednesday.
Afrihost is testing services from alternative providers with some of its clients as it fights to stay competitive in a fiercely contested service provider market.
And as far as MTN is concerned, if the company can source better wholesale prices elsewhere, it’s welcome to do so, even if that means less traffic flowing across MTN’s wholesale infrastructure.
“It’s important that that business … must deliver the profits we expect,” Nyati said. “When we assessed [Afrihost], we felt if they could get similar pricing from us from outside, it’s a good thing. We will still get the profits. We will not consider to [continue to]subsidise the prices they’ve been getting [until now].
“That business needs to relook its positioning. We need to look at what it is Afrihost can offer. It cannot be about lowest price because that’s not sustainable. We need to look at repositioning it into a value space, offering value versus being the lowest priced,” said Nyati, who chairs Afrihost’s board of directors.
Asked if MTN’s decision not to sell bandwidth to Afrihost below cost had affected the quality of its network given that many consumers have taken to social media and other forums to complain about network speeds, Nyati simply said: “In terms of network quality … it’s not linked to them being associated with us.”
MTN acquired a controlling 50% stake in Afrihost last year for R408m. — © 2015 NewsCentral Media