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MTN South Africa eyes return to growth with aggressive investment

19th May 2016

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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Telecommunications giant MTN South Africa (SA) plans to spend billions of rand this year in an attempt to claw itself back onto a growth path after a two-year decline in a moderate growth market.

CEO Mteto Nyati on Thursday said MTN SA would inject more than R12-billion of capital expenditure (capex) into infrastructure despite having to face one of the toughest years yet for MTN as a group.

Speaking at a media forum in Sandton, he said that, while this year would likely be one of the toughest the group would face and would see many companies scale back investment programmes, MTN would forge ahead with its ambitious capex plan to ensure it was well placed and ready for an economic bounce-back.

“At a time when other people are cutting down, we are making investments,” Nyati noted, adding that the main focus for the company would be returning to growth, transforming customer experience and overhauling people engagement.

“MTN will be ramping up its full service information and communication technology offering through MTN Business, delivering high-speed broadband to households and businesses through fibre-to-the-x rollout, driving long-term evolution (LTE) and third-generation (3G) handset distribution across all segments and decreasing second-generation (2G) distribution share across all channels,” he explained.

In the 2015 financial year, MTN SA aggressively increased its capex by 92.9% to R10.9-billion to add 966 2G, 1 593 co-located 3G and 3 148 co-located LTE sites to its network.

The improvements in 3G and LTE capabilities led to a 29% increase in average revenue per user (Arpu) as subscribers upgraded from 2G to 3G and a 19% lift in Arpu from those that had moved from 3G to LTE.

While the company had made strides in enhancing and improving its network, the current spectrum-constrained environment, where 98% of subscribers were served by just 40% of the allocated spectrum, placed ever-constricting pressures on the networks that were built on frequencies not suitable for data-intensive applications.

“A lack of high-demand radio spectrum has compelled MTN to refarm existing spectrum to cater to the pent-up demand for digital services, which operators cannot continue to meet without the allocation of the high-demand spectrum,” Nyati pointed out.

The spectrum “deadlock” was “detrimental”, with current acquisition methods unable to ensure efficient allocation.

“The refarming of existing spectrum to cater for LTE technology is an interim measure, as access to the high-demand spectrum is the prerequisite for the provision of high-performance networks and seamless network experience,” he concluded.

Edited by Creamer Media Reporter

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