Telecommunications group MTN faces tougher times in the 20 territories in which it operates outside SA as regulators across Africa and the Middle East begin to flex their muscles.
Outgoing group president and CEO Phuthuma Nhleko says operators across the region are facing tougher regulations.
Some of its key markets, including its largest, Nigeria, are forcing down interconnection rates — the fees mobile operators charge each other to carry calls on their networks. The company is already facing similar plans in the SA market, where it is headquartered.
Nhleko also expects Sim card registration laws, similar to SA’s Rica Act, to be introduced in almost all its operations in the next few years.
Already, the company has to deal with Sim card registration in important markets such as Nigeria, Ghana and SA.
But Nhleko thinks MTN’s growing ability to deal efficiently with Sim card registration across its territories could prove to be a competitive advantage for the group in the future.
Despite the growing regulatory pressures, MTN’s key markets continue to perform relatively well.
Nigeria, now MTN’s largest subsidiary by far, increased its market share from 45% to 51%.
Nhleko says a new incentive structure and a revised model have made the difference and he expects the growth to continue in 2010.
But competitive challenges are mounting, especially from Bharti Airtel, which recently bought Zain’s African assets. Zain has already started a price war in Kenya — where MTN doesn’t have a cellular operation — and analysts are concerned the company will do the same in Nigeria soon.
However, Nhleko says Nigerians switch networks easily and price cuts by competitors have to be supported by a robust network that can handle an influx of subscribers.
Nhleko says he is pleased with the performance of its other big West African contributor, Ghana, where MTN now has 56% of the market in spite of competition from four other big players in the country, including Vodafone.
“It would not have happened without significant investment in the network,” says Nhleko.
Ghana recorded a 19,2% increase in revenue in local currency terms against last year’s 22,8% growth. In rand terms, though, Ghana’s revenue fell 4,8% because of a sharp fall in the value of the cedi.
In the Middle East, Iran is again the standout performer. MTN Irancell has grown its subscriber base by 16%.
Nhleko says distribution agreements with local banks have helped bolster growth in Iran. It now has 27m subscribers, 10m more than in MTN’s home market, SA.
However, there are worries the group’s 49% in MTN Irancell could be diluted further, with talk of plans to list the company on the Iran stock market. Nhleko says MTN is in talks with Iranian regulators about the issue.
There are no immediate plans to list the Iranian business, he says. — Candice Jones, TechCentral
- Subscribe to our free daily newsletter
- Follow us on Twitter or on Facebook
