MTN Nigeria`s full year results, reflected in MTN Group`s financial year to 31st March 2003, show it has achieved a turnover of $571 million with a net profit of $106 million and is on track to meet its targets as indicated by its South African parent.
MTN Nigeria`s chief executive Adrian Wood presented the results on the first day of the GSM in Africa conference in Cape Town today.
Wood said the company was on track to spend its $1.4 billion investment budget and other telecom investments of $3.1 billion. It now holds around 59% of the estimated Nigerian GSM market.
MTN Nigeria received its cellular licence from the country`s regulator in February 2001 and in May that year, the first live calls were made on its network, with full customer service going live in August. The company has 1.3 million subscribers, 98% of whom are on prepaid contracts.
Nigeria remains a high growth, but difficult market for GSM operators. According to Wood`s presentation, there were 400 000 fixed-lines in the country plus 20 000 analogue cellular connections in July 2001. In August 2003, there were 2.1 million GSM lines compared with 550 000 fixed-lines.
Wood cited three main threats to MTN`s operating environment: political turbulence surrounding the April 2003 elections, regulatory uncertainty and intervention, and competitor market disruption.
He said the executive arm of the government was enthusiastic about attracting foreign direct investment, but that it remained low, although government was putting an effort into generating such interest. However, the general lack of infrastructure was an inhibitor.
Another problem was that while the Nigerian market was large with a total population of around 128 million people, it was difficult to measure. The gross domestic product of the country was low at around $400 per head, with a cash economy predominating with little or no consumer credit available. Inflation was high at 19% per annum, which impacted on the cost of capital.
Wood said MTN was also finding that it was not only building a GSM network, but having to put in a transmission and power network as well. This included having to place 1 400 generators that consume 1.5 million litres of diesel per month. The full network will eventually have 12 000 generators in place, requiring 12 million litres of diesel per month, meaning that 240 tanker trucks would have to be employed every day of the week.
Security is also a major concern, with 1 400 guards and supervisors employed on all premises, and CCTV and perimeter surveillance in place. Wood said security costs around $290 000 per month.
He said MTN Nigeria`s coverage had grown to link 55 cities, 992 towns and villages, and six geo-political zones by October this year, compared with 22 cities and five geo-political zones in September 2002.
The MTN Group will announce its interim results for the six months ended 30th September 2003 on Monday, 1 December 2003.
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