MTN's data offerings will become increasingly important for the pan-African mobile operator to continue enjoying the level of growth that it saw in the past financial year, says global analyst firm Frost & Sullivan.
MTN's major operations are in SA and Nigeria, and it grew its subscriber numbers in these countries by 17% and 34%, respectively.
Most of this growth came from prepaid subscribers, with low-denomination vouchers being a key driver.
However, postpaid, or contract, subscribers in SA grew by 9% and, although this is not broken down in the figures, Frost & Sullivan believes data contracts would have made up a key portion of this.
"Data will continue to be a major growth area for MTN, as most of its markets in Africa have mobile data penetration rates of less than 10% at present," notes Frost & Sullivan ICT analyst Spiwe Chireka.
This is going to grow quickly, given all the broadband infrastructure investment taking shape in Africa, and taking the worldwide experience of broadband growth into account, she says.
Fixed-line outpaced
Frost & Sullivan's recent research into SA's broadband market shows the number of mobile broadband subscribers is quickly outgrowing the number of fixed-line, or ADSL subscribers.
This trend is expected to prevail across the whole of Africa, since fixed-line infrastructure is poor on the continent.
Chireka adds that data services also have better revenue-generating potential, as the average revenue per user (ARPU) for data is expected to increase, while ARPUs for other services are declining.
"Data ARPU is expected to go up, given MTN's upgrades in markets such as Cyprus and SA to HSDPA and soon to HSUPA," she says. "This is also likely to spread into its other markets given the high potential of data ARPU."
Last year, MTN's ARPU declined marginally in almost all of its operations due to its increased penetration into lower income and lower usage segments.
Chireka also notes that MTN is facing a number of important challenges in Nigeria, with the mobile operator ordered to pay back a percentage of its monthly ARPU, she says.
"With the next round of testing due in May 2008, MTN must have its house in order if it wants to avoid another round of penalties," she says.
Chireka acknowledges that MTN's recently upgraded credit rating puts it in a favourable position to finance important projects and improve its services.
She expects MTN's planned $1.3 billion capital expenditure in Nigeria to become a reality soon, with other investments not far behind.
"Network upgrades and capacity expansion should be carried out in the near future if the company is to avoid further complications such as they had in Nigeria," she says.
"Frost & Sullivan believes it is only a matter of time before other regulators across the continent follow Nigeria's example, and MTN needs to be prepared."
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