Johannesburg - Telecommunications giant
MTN Group [JSE:MTN] said on Thursday ongoing spend on its network system in recent years has given it a competitive advantage in most countries the group operates in.
The group spent R15.5bn in 2009, 27.1% of revenue, on network upgrades. CEO Phutuma Nhleko described this as a peak, saying the group will spend R21.1bn in 2010.
Commenting on the group's interim results to end-June, Nhleko said that a combination of organic growth, capex spend and cost efficiencies has led to increased cash generation in the group and bolstered its competitiveness.
"How do we continue to differentiate ourselves? We believe network quality is crucial," said Nhleko.
He added that MTN also has a strong brand and skills that further bolster its competitiveness.
Other challenges are on the horizon, however.
"Distribution is going to be a battleground in virtually all countries. MTN has spent a lot of time and money on this in all our territories," said Nhleko.
MTN attributed revenue growth to an increase in subscribers and the economic recovery.
Results for the period under review showed an 11.4% rise in subscriber numbers since December to 129.2 million. The margin for earnings before interest, taxes, depreciation and amortisation (Ebitda) rose 0.5% to 43.3%, with free cash flow up 164% to R6.8bn. Adjusted headline earnings per share (Heps) increased to 20.6% to 438.6 cents.
MTN also introduced an interim dividend of 151c/share.
Down to business Industry analyst for Frost & Sullivan, Spiwe Chireka, said that the group's MTN Business subsidiary cushioned some of the pressure on the mobile voice segment of the market.
"While growth in the business segment is off a small base, we do expect this to be a major contributor in the future, especially when it is rolled out into the rest of Africa," she said.
"The 2010 FIFA World Cup was a key contributor to the company's revenues. Without that boost, we may have seen Ebitda growth in South Africa continue in the lower digits."
Chireka said that despite growth in the Nigerian market, MTN faced rising challenges in the country.
"The price wars are catching up with the GSM operators and the proliferation of CDMA (code division multiple access) makes the market crowded," Chireka said.
She said Frost & Sullivan also expects subscriber registration legislation, similar to South Africa's Rica legislation, to have an effect on the Nigeria operations.
"This will lead to lower subscriber growth. By the end of this year we may even see Nigeria reporting a decline in subscriber numbers for the first time," she said.
She said that MTN's strong financial position would help it boost the growth of MTN Business in Africa, giving other ICT suppliers a run for their money.
- Fin24.com