With the launch of MTN’s LTE offering and other happenings in the mobile industry, we had a chat with MTN’s Chief Financial Officer Zunaid Bulbulia about the most profitable market for MTN, where the company is heading and how LTE fits into MTN’s long-term plans.
What does the future hold for Africa’s biggest operator?
There are two big focuses right now in terms of where we are focusing our attention. The one is primarily in the space of data, which I guess isn’t a surprise to anyone, with voice’s growth getting slower.
After 17 years of growth, we expected that to be the case, so the focus is more towards data and ensuring that we got proper propositions out there and driving a business that will be able to support data – a network that can do data and a service business that can do data is a significant part of our focus.
Data is still growing between 20% and 30% per annum. MTN’s other focus is in the ICT space. So we are starting to make very meaningful forays into getting ourselves ready for being able to sell across the value chain in terms of services, converged services between fixed and mobile, and we took the first real meaningful step in that direction when we bought MTN Business. That gave us a very meaningful footprint in the market.
The diversification of the business away from voice to data and ICT is certainly in the context where we are focusing our medium to long-term attention on.
How does LTE fit into MTN’s plans?
LTE is significant and as you know we are doing a pilot at the moment, and it is a significant focus in the context of the speed of data. So we are not looking at LTE specifically as another technology, it’s along the evolutionary scale of speed.
So LTE is certainly our focus, but I think the charge to LTE is going to be to what extent we have to roll it out to the entire network, because it’s damn expensive. (We’re testing it here because) South Africa is a bit of a guinea pig, as we do try a lot of things here first, because SA has a healthy mix of third and first world.
Most of the things that happen in Europe we try here first – we are about only a month behind them in many instances. The plan is if LTE works here, we will certainly push it to the other countries.
What can we expect in terms of LTE pricing?
To some extent, that will probably happen as a result of how the market evolves. The issue on data is that I think we did go in relatively high, and then as competition started to hot up, the pricing followed very quickly – and now we probably have the lowest data rates in the world.
So I think LTE will probably start as a premium service, like it has for all other data, and then start to position itself with a downward value chain. As it becomes commoditised, the price will start to come down. I think LTE will probably, in medium term, be going down to the same rates we get at this point in time.
There is a view still to be tested that whether LTE is probably better just for certain pockets of the network, and that you only do it in certain parts of your customer base, and if it stays there and doesn’t become commodities, then there will be a premium associated with that
Which African nation is the most profitable for MTN?
Hands down, Nigeria is MTN’s success story of note. Just before the turn of the millennium we pushed out there and up to that point MTN were only in South Africa and playing second-fiddle to Vodacom. Initially we went into Uganda, Rwanda and Swaziland, but Nigeria changed MTN from a landscape point of view.
Nigeria now, from a number of subscribers, is bigger than South Africa as a business. It’s more profitable than South Africa because it’s predominantly a pre-paid business, and there is very few post-paid.
So Nigeria without question is our biggest operations, it’s our most successful operation in terms of profitability and is the differentiating factor between us and our competitors.
We are now bigger than Etisalat, far bigger than Vodacom – those guys are now comfortably second. The last time I checked, MTN was either the number 10 or 11 biggest mobile operator in the world.
Charlie Fripp – Consumer Tech editor