MTN dispels fears over telecoms slowdown

Telecoms giant MTN, has dispelled fears that the telecommunications sector in emerging markets were no longer attractive investments.

Chief executive officer Phuthuma Nhleko this week said the mobile industry in developing countries should perform better than many other sectors during the global economic recession as communication was essential.

“I suspect the mobile industry, simply because this has become an almost essential service, will most probably not be as hard hit as other sectors,” he said.

MTN is faced with rising competition in its African markets, where European mobile operators such as Vodafone and France Telecom are expanding but Nhleko said the company was up to the task to cope with
competition.

The company has seen its shares fall 20 percent this year in what analysts have said was partly because of investor fears that rising inflation in developing countries would prompt people to cut their mobile spending.

Performances by other companies in the sector such as Millicon, which saw its share price fall by 66 percent in 2008, were worse.

.Nhleko highlighted the potential for growth in MTN’s markets, saying, given that, on average, only 30 percent of people owned mobile phones.

He said in the next two to three years, mobile phone ownership could increase to 50 percent. MTN is the leading mobile operator in most of its markets.

It has forecasted mergers between operators because some would struggle to survive in crowded markets.

MTN this year held talks about a possible merger with Reliance Communications, India’s second-largest mobile operator but the talks broke down, as did earlier discussions with Bharti Airtel, India’s largest
mobile operator.

By ItnewsAfrica.com