Stiff competition and an unexpected regulatory situation resulted in disappointing interim results for MTN's operation in Sudan.
MTN group CEO and president Phuthuma Nhleko says the Sudanese operation was MTN's most serious challenge. This was evident in the performance of the business reported in the company's interim results for the six months ended 30 June 2008, released yesterday.
According to Nhleko, a regulatory issue during the second quarter of this year was the dominant reason for the company's poor performance in the area. The country's regulator insisted subscribers across the country register their personal details with whichever operator they used.
"However, by the time the deadline came, many subscribers had not registered. We had to disconnect 1.1 million customers at the regulator's request."
Nhleko intimated that some of the company's competitors in that region may not have dropped customers who had not registered.
As a consequence, MTN's market share in the region dropped from 28% to 25%.
Another setback for MTN Sudan was the introduction of a government-run CDMA telecommunications company. "The government-run service came into the market with extremely low tariffs and large handset subsidies, which affected our business."
However, Nhleko added that the MTN group was working on strategies to better the performance of the Sudanese operation. The company says this will include a "revitalised distribution and value propositions" which it will action in the second half of this financial year.
The company says high inflationary pressures being experienced by all the emerging markets also affected Sudan's performance.
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