MTN’s aggressive penetration into markets shunned by other operators is the group’s most significant competitive advantage according to global growth consultancy Frost & Sullivan. The company’s position as a “risk-taker” continues to show rewards.  

“They have managed to thrive in challenging markets such as Nigeria where other operators have failed to survive,” says Frost & Sullivan research analyst Spiwe Chireka. “It is this ability or willingness to go where no one else is willing to go that puts MTN apart from its competitors.”
The company’s results show a substantial growth of 20% in its overall subscriber base. The group now serves 48,2-million users across all its regions. This includes significant increases in subscriber numbers in Iran, Ghana and Sudan.
Its move into Sudan is the latest of its high-risk undertakings. The conflict in the country is well publicised and several international companies have withdrawn from the region. But MTN has seen this vast untapped market as one of Africa’s largest opportunities.
“Growth opportunities in Uganda are also huge,” notes Chireka. “The highly successful MTN VillagePhone project is increasing the penetration of cellular phones in the rural areas of this country, where 80% of the population resides."
In the competitive South African market, MTN’s growth was stable. The primary growth continues to come from lower-usage segments in the prepaid sector.
Chireka however points out that the average cost per user (ARPU) continues to decline for all cellular operators as they increase their subscribers in low-income groups. The challenges this creates is that revenues from calls are lower and that this segment communicates mostly via SMS, which is not a substantial income generator.
“MTN’s revenue in South Africa comes mainly from interconnection fees rather than from voice calls by its subscribers,” Chireka says. “With that in mind, ICASA’s hearings into reducing the interconnection fees between cellular operators are a threat.”
MTN will therefore look for increased revenue growth from its data and fixed-line services. MTN has started building a fibre optic cable in South Africa and has also invested in fibre optics in Nigeria to increase the penetration for fixed-line services.
“This fibre in South Africa has the potential to take customers away from Telkom as it will provide major customers with direct access to MTN’s nework,” Chireka says. “It will also go towards meeting the increased demand for data connectivity.”
MTN today announced that its subscribers have grown 20% to 48,2-million for the six-month period from December 2006.
Meanwhile, revenue has increased 69% to R34,2-billion for the year ended 30 June 2006. EBITDA was up 75% to R15,2-billion, with the EBITDA margin increased to 44,4%.
The group announced adjusted headline earnings per share of 324,7 cents .
Says MTN Group president and CEO, Phuthuma Nhleko: “Our subscriber growth reflects the strong opportunity we have in our expanded footprint. The MTN Group’s leadership position in mostly high growth markets provides a solid platform to grow our subscriber base. The provision of appropriate products and excellent service to our customers remains our priority.
“The MTN Group is focused on enhancing the quality of our network and ensuring that we are well placed to benefit from a rapidly converging telecommunications market. Going forward, we will also continue driving operational synergies, improving the Group’s cost base and pursuing strategic expansion opportunities.”
MTN South Africa delivered a stable performance in a very competitive market, increasing its total subscriber base by 7% from December 2006 to 13,4-million at June 2007. The postpaid subscriber base grew by 3% to 2,4-million subscribers and the prepaid base increased by a healthy 7% to 11-million over the six-month period. Low-denomination vouchers have been a key driver in stimulating usage.
Average revenue per user (ARPU) in the postpaid segment decreased to R435.00 from R487.00 in December 2006 and prepaid ARPU decreased to R87.00 from R94.00, both decreases owing to continued penetration into lower-usage segments. As expected, blended ARPU decreased 9% to R149.00 from R164.00 at December 2006.
The MTN data proposition is gaining momentum with a 58% increase in data revenue to R1,2-billion. This was due to competitive pricing and an increased 3G rollout.