MTN Group CEO Ralph Mupita said on Tuesday that he expects consolidation of mobile network operators in the markets in which the group operates as high capital investment requirements make it increasingly difficult for smaller operators to keep up.
Mupita, speaking during a PSG webinar hosted by broadcaster Bruce Whitfield, said MTN spends more than US$2-billion/year on network infrastructure. This sort of spending means smaller market players are going to find it difficult to compete.
“The days of five- or six-player markets, or even four-player markets, not just in South Africa but more broadly across our markets, are no longer sustainable,” Mupita said.
“There is not enough of a profit pool for people to … get the right return. Consolidation is inevitable because the amount of capital investment required to move from 3G to 4G and ultimately 5G is of such a nature that number threes, number fours, number fives cannot make a decent return on their invested capital.”
Even the vast US market only has three national mobile operators, he said.
He also said it’s important for regulators across Africa to create a predictable regulatory environment to make planning and investment easier. This includes ensuring operators are given sufficient spectrum.
Turning to the recent spectrum auction in South Africa, during which MTN secured 100MHz of additional frequencies, Mupita said the country “probably lost a decade and a half of development” due to the delays in allocating access.
However, he lauded communications regulator Icasa for pushing ahead with the auction “notwithstanding some of the challenges” – a reference to Telkom’s litigation against the process, which was recently withdrawn.
Mupita said the spectrum allocated to MTN – for which it paid R5.2-billion – will be sufficient for the next three to four years. However, he hinted that more spectrum will need to be allocated beyond that to keep up with the ever-expanding demand for data from South African consumers. MTN South Africa acquired 20MHz of spectrum in the 800MHz band, 40MHz at 2.6GHz and 40MHz at 3.5GHz.
“In South Africa, we now have 179MHz of spectrum. That’s the same as [MTN] Zambia, and Zambia is a smaller market. Spectrum is the oxygen of networks. The more spectrum you have, the more efficient you can be,” he said. – © 2022 NewsCentral Media