MTN looks to dig­i­tal and cor­po­rates for growth

CityPress - - Busi­ness - JUSTIN BROWN justin.brown@city­

MTN SA was eye­ing its dig­i­tal and en­ter­prises busi­nesses for growth and was look­ing to ac­qui­si­tions to add to or­ganic growth in th­ese ar­eas, CEO Mteto Ny­ati said this week.

On the other hand, MTN’s lo­cal unit was look­ing to grow its tra­di­tional telecom­mu­ni­ca­tions busi­ness or­gan­i­cally, he said dur­ing an MTN me­dia event.

Ex­am­ples of re­cent ac­qui­si­tions by MTN SA in­cluded Trav­el­start and Smart Vil­lage, Ny­ati said.

In late 2013, MTN bought a 33.3% stake in African In­ter­net Hold­ing (AIH). Prom­i­nent sub­sidiaries un­der AIH in­clude Nige­rian on­line re­tailer Ju­mia, South African e-re­tailer Zando and Hellofood.

In Septem­ber last year, MTN con­cluded a deal with Mul­tiChoice to ac­quire Smart Vil­lage, which sup­plies fi­bre to homes.

In Fe­bru­ary, MTN and Amadeus Cap­i­tal in­vested $40 mil­lion (R650 mil­lion) in Trav­el­start, an on­line travel agency fo­cused on Africa.

Ny­ati said that the MTN SA board and the MTN Group board had not placed any lim­i­ta­tions on spend­ing on ac­qui­si­tions, but he de­clined to say how much MTN SA could spend on ac­qui­si­tions in the fu­ture.

In an ef­fort to boost its ail­ing lo­cal unit, MTN was bet­ting big and out­spend­ing its big­gest ri­vals by in­creas­ing its cap­i­tal spend for this year by 50% to R12 bil­lion, Ny­ati said.

“MTN SA’s mar­ket share has been de­clin­ing in a lo­cal mar­ket that is grow­ing. We want to re­turn the lo­cal busi­ness to growth ... Other peo­ple are scal­ing back cap­i­tal ex­pen­di­ture; MTN SA is do­ing the op­po­site,” he added.

The R12 bil­lion in­vest­ment will be used to im­prove MTN’s voice, data and fixed broad­band in­fra­struc­ture, and is an in­crease on the R10.9 bil­lion MTN SA spent last year.

This is higher than Vo­da­com SA’s spend of R8.7 bil­lion in the year to March, which was up from Vo­da­com SA’s spend of R8.6 bil­lion in the year to March 2015.

The sig­nif­i­cant cap­i­tal spend­ing comes against the back­drop of a slow­ing lo­cal econ­omy and a mas­sive $3.9 bil­lion fine that MTN faces in Nige­ria, which has made the com­pany re­view its spend­ing plans.

Ny­ati said MTN SA had achieved 3% growth in rev­enue last year af­ter two years of de­cline.

In 2015, Ny­ati said MTN SA saw its sub­scriber base in­crease by 9.3% due to at­trac­tive pre­paid voice and data of­fer­ings.

How­ever, in the first quar­ter of this year, MTN saw a 1.7% drop in its sub­scriber base to 30.1 mil­lion, he said.

Ny­ati said that MTN SA had recog­nised the Com­mer­cial Work­ers’ Union as a union fol­low­ing a strike last year at the com­pany.

“An im­proved work­ing re­la­tion­ship with or­gan­ised labour is bear­ing fruit,” he said.

How­ever, Ny­ati warned that given the state of the econ­omy, strikes were go­ing to be the or­der of the day.

Turn­ing to spec­trum al­lo­ca­tions, Ny­ati said that the dead­lock over spec­trum in the coun­try was detri­men­tal to lo­cal tele­coms com­pa­nies, as well as the coun­try as a whole.

“The lack of spec­trum al­lo­ca­tion is in­creas­ing the cost of telecom­mu­ni­ca­tions,” he said.

MTN SA act­ing chief tech­nol­ogy of­fi­cer Kr­ishna Chetty said that the com­pany had spent more than R20 bil­lion on its ra­dio net­work roll-out in 2014 and 2015.

The com­pany had also spent R1.7 bil­lion on its fi­bre roll-out over the past seven years, Chetty said.

Alpheus Man­gale, MTN SA chief en­ter­prise busi­ness of­fi­cer, said a key area of growth for MTN SA was in IT ser­vices.

MTN SA’s cloud ser­vices was ex­pected to ex­pe­ri­ence strong growth off a low base, Man­gale said.

“We are trans­form­ing MTN Busi­ness to be the in­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy part­ner of choice. We aim to fuel small and medium en­ter­prise growth in South Africa,” he said.

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