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Aug 08, 2012

MTN grows profit, subscriber numbers as competition heats up

MTN South Africa MD Karl Pienaar discusses South Africa’s performance under lower market prices. Recorded: 08.08.2012. Camerawork: Nicholas Boyd. Editing: Darlene Creamer
Bloemfontein|Cape Town|DURBAN|Engineering|Johannesburg|Africa|Efficiency|MTN South Africa|Africa|South Africa|Mobile Operator|Services|Telecommunications|Infrastructure|Karl Pienaar|Sifiso Dabengwa|Operations|3G
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Despite increasing competition in the South African telecommunications market, mobile operator MTN South Africa added 1.5-million subscribers to its network in the six months to June, and expected to add another 1.5-million by year-end.

The telecommunications group, which now held 23.5-million customers, reported on Wednesday that it increased its market share to 35.5% during the period, up from 34.1% in December.

Group CEO Sifiso Dabengwa attributed the growth to strong promotional campaigns, MTN Mahala and MTN Zone offerings, as well as data services within its prepaid segment.

The South African operations recorded a 9.5% revenue increase to R10-billion during the six months to June, owing to a 49% jump in data revenue and prepaid revenue growth of 15%.

Data revenue contributed 15.9% of the total revenue compared to 11.6% in the prior comparative period, the group stated at its interim results presentation, in Roodepoort.

Discussing the “price wars” between competitors in the local market, MTN South Africa MD Karl Pienaar told Engineering News Online that competition between the operators has always been “very” aggressive. But, he noted, the drop in pricing seemed to be more aggressive than seen in recent years.

Pienaar said the lower prices were good news for both consumers and operators, with consumers gaining a better deal, while operators attracted higher revenue through increased use.

However, he believed that the data price had fallen too low and that it could hinder future capital expenditure (capex) and investment in infrastructure, or even competition, as the smaller players would have difficulty operating sustainably if the data price fell below cost.

Pienaar also pointed out that the price decreases were not only a result of competitive measures or pressures, but, in most cases, fell owing to increased efficiency and ever-changing infrastructure.

MTN reported that it has, to date, spent R1.9-billion of its authorised R5-billion capex for the year on modernising its network and increasing 3G capacity.

During the period, MTN rolled out 146 2G sites and 446 3G co-located sites. The group currently had 6 772 2G and 3 600 3G co-located sites across South Africa.

Further, MTN has trenched 95% of the national long distance route from Johannesburg to Durban, 91% of the Johannesburg to Bloemfontein route and 70% of the Bloemfontein to Cape Town route. Over 50% of the fibre network has been installed.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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