MTN continues expansion

By Damaria Senne, ITWeb senior journalist

Johannesburg, 24 Nov 2005

MTN will continue to explore value-enhancing international expansion opportunities in Africa and the Middle East, says the company.

In a media statement following the release of its interim results for the six months ending 30 September, MTN stated its intention to further consolidate its position on the African continent and to diversify its investment portfolio beyond the continent.

"Our entry into the Middle East has been made possible by our strong African footprint that laid the foundation for our expansion beyond the continent," says CEO, Phuthuma Nhleko.

The MTN stake in IranCell offers significant growth potential as it is estimated that only 11% of Iranians are mobile subscribers, he says.

The conclusion of the IranCell deal is good news for the group, says Russell Southwood, CEO of Internet and telecoms consultancy Balancing Act, as it had "run out of places to go on the continent" and lost out on the last couple of tenders it bid for.

"Its greatest strengths have been its ability to roll-out effective networks, even in difficult places like Nigeria where the power supply issues are daunting, and its ability to market to customers," says Southwood.

MTN`s business model has been pragmatically developed in response to opportunities, and combines elements of fixed and mobile in something like the second national operator in Uganda, he says.

"This combined fixed/mobile element may stand it in good stead as the line between fixed and mobile blurs and as technology-neutral regulation begins to reflect this change," he says.

The key difficulties that MTN faces, he says, involve differences in culture, available management resources and the ability to manage at a distance. While MTN has managed across a number of different cultures in Africa, Iran is a very significant culture shift, he adds.

"I think we have to assume that MTN would not have taken the decision if it didn`t believe it had the people who could do it."

Market share competition

The central battle between the large mobile operators in Africa will be between MTN and Vodacom, with Vodacom enjoying the strong ownership and backing of Vodafone and Celtel, Southwood says. He predicts the struggle will result in the further consolidation of operators.

He says the questions are: What will the large mobile operators buy to gain advantage? And which of the large mobile operators might be bought out?

Southwood agrees with the market view that presents MTN as the easiest acquisition target, but cautions that "because it`s possible, doesn`t mean it`s going to happen".