No 2 tries harder in SA’s mobile network war
MTN’s CEO says he is ready to take the fight to rival Vodacom
MTN South Africa has had a torrid few years. It has lost market share to Vodacom and Cell C, it has suffered debilitating industrial action, its network hasn’t been up to snuff, its customer service has been found wanting and it has had a high turnover of CEOs.
But its latest CEO — Mteto Nyati, formerly country MD for Microsoft, who has been in the post for just over a year — believes he is now on top of the problems. He has set out a detailed plan of how to win back lost market share and take the fight particularly to Vodacom, especially in the lucrative post-paid segment.
Analysts have warned, however, that winning back lost market share will be difficult, especially from Vodacom, which continues to function like a well-oiled machine.
“Coming into 2016, our focus had to be fixing the basics,” Nyati said this week. This meant a radical improvement to the network. “We were below par in some areas, and this was not something a No 2 market player should accept.”
MTN hired an external company to benchmark its network against its rivals and it hired a top executive from Vodafone, Babak Fouladi, as its interim chief technology officer. It then identified eight cities — including Johannesburg, Pretoria, Cape Town and Durban, which generate 70% of its revenue and where most of its high-value customers live — and focused on reducing dropped call rates and improving network throughput, among other metrics.
“Independent assessments now show that we are at the level we wanted to be in those cities, or No 1,” Nyati said. “Next year, we will be moving to other cities, but it was important to be competitive first in these ones.”
Another focus was MTN’s poorquality call centres, which were always going to be a hot potato given that this part of the business was the focus of a protracted and sometimes violent strike in 2015.
Despite union resistance, Nyati pressed ahead with a partial outsourcing of the call centres, with routine and repetitive tasks (the greater volume of queries) now handled by a third party and more complex and sophisticated tasks handled by a smaller and more specialist inhouse team.
MTN avoided further strikes, Nyati said, by keeping staff abreast of the strategy behind the outsourcing.
“We now have very strong engagement with our employees. We have become the primary source of information to them, and because of that they could make better decisions. By being open and honest in our dealings with them, they can see we have applied our minds, and we started to have stability in the workplace.”
He said this engagement is critical for any company facing the challenges of weak economic growth and uncertainty. “Companies that can’t manage the relationship with their employees and the unions are going to have big challenges.”
Quality controls have also been imposed. All customer queries must be sorted out within 24 hours, Nyati said. If not, management intervenes to find out what the problem is.
“Once we gain insight into a problem, we proactively ask who else LOST GROUND: A run of bad years for MTN, including labour disputes and technical problems, has left it trailing Vodacom in market share. But CEO Mteto Nyati says that’s all changing could be affected by it and then call customers before they even have the problem.”
He said the company’s “net promoter scores” — a measure used by many telecommunications companies to determine how likely customers are to recommend their services to others — had improved by eight points since January. This is even though MTN hiked prices in July.
Its 450 retail stores nationwide are also a big focus area. These are being overhauled, with more self-service areas and more reliable systems along with new training for customer-facing staff. This year 35 stores were refurbished but budget has been allocated to expand this to a rate of 30 stores a month next year.
MTN has begun cracking down on sim-swap fraud, with one-time pins now in place for authentication, for example. Anti-fraud measures will attract more and more investment, Nyati said.
All these measures are starting to bear fruit.
“We have been growing consistently GOOD CALL: CEO Mteto Nyati since the third quarter of last year, and we are growing faster than No 1 [Vodacom]; we are taking value share from them.”
Crucially, net connections on postpaid have been positive for the past four months, he said. “No 1 is stronger in that space. We have the same prepaid revenue [as Vodacom] . . . but the area where we have been weak is in post-paid.”
But Irnest Kaplan, MD of Kaplan Equity Analysts, has warned that MTN South Africa will have to work “disproportionately hard” to win back lost market share.
“There was a period of years where MTN was not doing well and it seemed like Vodacom was really powering ahead. It had a lot of problems, but it now seems it’s addressing these,” Kaplan said. “When you lose ground in the mobile space it’s very difficult to recover that.”
Brian Neilson, research director at BMI-TechKnowledge, said MTN had not done enough yet to turn the ship around fully. Where it had done well was in investing in its network — more than R20-billion in 2015 and 2016. This would allow it to compete better with Vodacom.
“If MTN can be at least as good as the best network for data, then I think that is going to be its number-one comeback [opportunity].”
We are growing faster than No 1 [Vodacom]; we are taking value share from them