Apr 04, 2008
MTN raises capex to R30bn to close capacity, quality gapsBack
The rand:dollar exchange rate that the capex going forward was budgeted on was R7,22.
“We are dealing with a fairly significant growth in demand, and that demand is outstripping the capacity that we have, and because of that, we have resolved to make 2008 quite a very large capex year, to try to ensure that we fully exploit the demand and don’t find ourselves losing out on this growth,” stated MTN group president and CEO Phuthuma Nhleko.
“The two key operations to mention there are Nigeria and South Africa. I think that, if you look at the quality of the South African network at the moment, it’s not what it needs to be, and it’s not what it was. Obviously, there is also the infrastructure roll-out from the fibre perspective that comes through and then there’s also additional 3G capacity roll-out that comes through there,” reiterated MTN group financial director Rob Nisbet.
Commenting further on the South African market, Nhleko added that laying fibre cable was a key priority. He said that the company was planning on laying almost 5 000 km of cable by the end of 2008.
MTN also started the roll-out of 3G in Nigeria on a pilot basis.
In 2007, MTN approved about R18-billion for capex, but it only spent about R15-billion, said Nisbet. However, considering exchange rates and the stronger rand in 2007, he added, “We probably put about R16,5-billion in the ground, and I think we said we would end up putting R17-billion in the ground – so we weren’t actually that far off from what we said we would put in the ground.”
Nhleko also indicated that he was aware of the scepticism with regard to the company’s ability to implement the roll-out and put that infrastructure into the ground in time, but was confident that the pace had increased, and noted the examples of Nigeria and Iran, as the latter currently had over 2 000 live sites.
“It was the first time that we went on a complete turnkey basis with three very big international vendors, and we believe that helped us a great deal with the coverage,” he said about the increased pace of roll-outs.
Huge infrastructure roll-outs were not only expected in Nigeria and South Africa, and the group stated that, in Ghana, it planned to lay 1 660 km of fibre in 2008, which would improve transmission capa-city, and increase the groups market share there.
Iran showed substantial growth over the period, and the group’s market share went from 12% in June 2007, to 25% by December 2007. By December 2008, the group expected the Iranian market to be the size of the South African market – which took 14 years to build. The infrastructure step change in network capacity in Iran included over 2 000 live sites, 1 500 km of road coverage, and the coverage of 339 cities.
Also in the Middle East, in Syria, the group enhanced the quality of its network in 2007, and rolled out 317 base stations, although the group has to use the regulator’s infrastructure in the country.
In Sudan, MTN experienced difficulties rolling out sites in southern Sudan, and rolled out less than 40 sites in Darfur, although the technical challenges from the first quarter were resolved.
Convergence also remained an important theme for the company, and although it’s ‘talks’ with Telkom “couldn’t proceed to a conclusive stage”, MTN had continued in other countries like Nigeria, Côte d’ Ivoire and Cameroon, to acquire ISP’s with a view of having a far more integrated solution and value proposition for its clients, particularly the corporate clients. “This will continue to be a big feature of 2008,” Nhleko said.
The company was in a mobile banking joint venture (JV) with Standard Bank, and a mobile television JV with Multichoice.
Owing to the difficulties in being granted new licences, the group said that much of its expansion going forward was likely to be in the form of mergers and acquisitions.
Edited by: Martin Zhuwakinyu
Creamer Media Senior Deputy Editor
To subscribe email email@example.com or click here
To advertise email firstname.lastname@example.org or click here
Other Video News
Recent Research Reports
Energy Roundup – May 2016 (PDF Report)
The May 2016 roundup covers activities across South Africa for April 2016 and includes details of the National Energy Regulator of South Africa’s proposal to introduce a coal benchmark cost as part of its final decision on Eskom’s multiyear price determination...
Automotive 2016: A review of South Africa's automotive sector (PDF Report)
Creamer Media’s Automotive 2016 Report provides an overview of South Africa’s automotive industry over the past 12 months. The report provides insight into local demand and production, vehicle imports and exports, investment and competitiveness in the sector, as well...
Energy Roundup – April 2016 (PDF Report)
The April 2016 roundup covers activities across South Africa for March 2016 and includes details of a North Gauteng High Court Judge’s dismissal of a court application to postpone the 9.4% electricity tariff increase, which the National Energy Regulator of South...
Electricity 2016: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2016 report provides an overview of South Africa’s electricity sector, focusing on State-owned power utility Eskom and independent power producers, electricity planning, transmission, distribution and the theft thereof, besides other issues.
Energy Roundup – March 2016 (PDF Report)
The March 2016 roundup covers activities across South Africa for February 2016 and includes details of the Department of Energy’s plans to announce the preferred bidders for the first tranche of the coal independent power producer procurement programme; the Council...
Steel 2016: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2016 Report examines South Africa’s steel industry over the past 12 months. The report provides insight into the global steel market and and particularly into South South Africa’s steel sector, including production and consumption, main...
This Week's Magazine
The two spent-fuel pools at Eskom’s 1 800 MW Koeberg nuclear power station, in the Western Cape, will be full by 2018, increasing the urgency on the State-owned utility to begin pursuing alternative storage options. Koeberg has, over the past 32 years, accumulated a...
South Africa lacks the skills necessary to implement the government’s plan to build 9.6 GWe of new nuclear energy capacity, warns nuclear-qualified Quality Strategies International CEO David Crawford. “Apart from the concern about the affordability of the programme,...
Cybersecurity multinational Check Point has released its latest 700-series cybersecurity systems for small businesses, which draw on its international threat intelligence to provide up-to-date cybersecurity, says Check Point South Africa country manager Doros...
Daimler Trucks and Buses Southern Africa (DTBSA) saw a marked slip in new-vehicle sales in 2015 compared with 2014, with sales dropping from 5 897 units to 5 300 units. The decline came as the South African new truck and bus market declined from 31 558 units in 2014...
Group of 20 (G-20) economies threatened to penalise havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion. The G-20 will consider “defensive measures” against financial centers and...