Strong subscriber growth has seen MTN turn in solid increases in revenue and earnings for the six months up to 30 June 2008.

The group has grown its subscriber base by 53% to 74,1-million a year ago. This has resulted in revenue increases of 35% to R46,1-billion, EBIDTA growth of 29% to R19,6-billion and adjusted headline EPS (earnings per share) up 26% to 408,5 cents.
The 74,1-million subscribers are a 53% increase from June last year, and a 21% from the 61,4-million subscribers at the end of December 2007.
In the last six months, Subscribers in the WECA  (West and Central Africa) region increased by 16% to 32,5-million. Those in the SEA  (South and East Africa) region grew by 9% to 21-million, while the MENA (Middle East and North Africa) region recorded a 47% increase to 20,6-million.
The average revenue per user (ARPU) has marginally declined in most operations, which is consistent with increased penetration into lower usage segments.
MTN South Africa performed well in a very competitive environment, says the group, despite the slowdown in consumer spending in many sectors due to rising
interest rates, inflation and the rising fuel prices.
Subscribers in South Africa increased by 5% to 15,6-million in June 2008 from 14,8-million in December 2007. This was mainly due to strong growth in prepaid subscribers which grew 6% to 13-million and, to a lesser extent, the 4% growth in postpaid subscribers to 2,6-million.
The introduction of MTN Zone in February 2008, together with the continued impact of low denomination vouchers played a major role in the acquisition of prepaid subscribers. MTN Zone had 4,5-million users at the end of June 2008, of which 400 000 were estimated to be new connections.
Average revenue per user (ARPU) of the prepaid segment remained stable at R92.00 while postpaid ARPU increased R9.00 to R405.00. The prepaid ARPU performance was positively influenced by the continued success of the low denomination vouchers and higher average usage by the subscribers that signed up for MTN Zone when compared with other prepaid subscribers.
During the period additional nodes were introduced to increase capacity on the voice and data core networks of 25% and 30% respectively. SMS capacity was
also increased by over 40%.
To improve the efficiency of the distribution channel, MTN South Africa acquired the remaining 51% shareholding of Cell Place and also exercised the right to acquire the remaining 51% of I-Talk. Both these transactions, together with Verizon South Africa, are subject to the Competition Commission approval.
The liberalisation of many developing telecommunications markets, leading to an increase in convergence strategies from players in both the fixed and mobile areas, means that MTN can expect more intense competition in the markets in which it currently operates.
However, growth consulting company Frost & Sullivan believes that the operator's corporate culture of aggressive expansion, innovative product offerings (such as one roaming tariff for Africa) and its focus on quality provide it with a continued competitive advantage.
"MTN hasn't experienced the massive geographical expansion characterising its last reporting periods, but that certainly doesn't mean it's not been active," says Frost & Sullivan ICT industry analyst Lindsey Mc Donald. "The company has targeted acquisitions that will complement its existing service offering. The deals concerning iTalk Cellular in South Africa and Verizon Business in various African states are examples of this."
MTN's actions are in keeping with moves by industry players to position themselves as converged communications providers. It also indicates recognition of the importance of data services, which are set to increasingly contribute to operator revenue going forward.
Recent analysis from Frost & Sullivan estimated that the growth of mobile internet in Africa will be between 40% and 50% over the next two years. This represents significant potential for companies like MTN.
"Frost & Sullivan anticipates increased movement from MTN into the provision of data services, in keeping with the decisions the operator has made in South Africa and Nigeria," Mc Donald says. "The operator has already extended its investment in fibre optic infrastructure in South Africa from a single project in a high traffic area between Rosebank and Sandton to a national network that will be 5,000 km in length. In Nigeria, MTN is already a fixed and mobile services provider. It is not unreasonable to assume that these are a sign of things to come in other markets."
MTN's expertise in emerging markets will continue to be a factor upon which it can capitalise. Geographical expansion remains a strong growth option open to the company, with markets in Latin America and Asia perhaps the most obvious targets.
"The operator's proven ability to quickly enter a market, establish infrastructure and distribution channels and then launch quality services will stand it in good stead for new market entrances," Mc Donald says.
She adds that there are also growth opportunities for MTN in the realm of product and service offerings. Acquisitions or strategic partnerships are likely to be the main vehicles for growth in these areas.
Mc Donald believes that the strength of MTN's corporate culture will ensure that it remains a leading telecommunications company.
"This has been recognised by international players such as Bharti and Reliance, and is one of the key reasons for their interest in investing in the African operator," she says. "It would seem that MTN's commitment to the preservation of its corporate culture and strategic direction is perhaps the common reason for the failure of merger talks with the Indian operators."