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MTN warns lower call rates to hit revenue

Nov 10 2010 12:47 Reuters & I-Net Bridge

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Cape Town - Africa's biggest mobile operator, MTN Group [JSE:MTN] said it expects lower mobile termination rates to cut 9% from its revenue next year.

MTN hopes to compensate for the lost revenue by boosting its market share and data services, Karel Pienaar, MD for MTN South Africa, told Reuters on the sidelines of an African telecoms conference.

"We will see an impact; this year we've seen a 9% decrease in revenues from MTR (mobile termination rates) and we will see a similar decrease next year," he said.

The cutting of fees cellphone companies charge to handle calls from other providers is likely to hit earnings at domestic carriers.

MTN's rival Vodacom said this week the lower rates had an R800m impact on its first-half revenue.

MTN has also joined the growing chorus of operators singing the praises of the smartphone as a growth driver in the local telecoms industry.

Pienaar told the AfricaCom conference: "Smartphones will drive growth. Smarthphones will account for 60% of total handsets shipped into South Africa by 2014."

Pienaar's comments follow those of Vodacom CEO Pieter Uys earlier this week.

Announcing the group's first-half results, Uys said smartphones would drive demand for mobile data. He said that 20% of all new handsets sold by the group were smartphones.

Pienaar pointed to a "paradigm shift" in how people were using handsets.
"Mobile operators need to claim back the power of the SIM in providing multi-point offerings."

He added it was important to continue to focus on quality of speed, coverage and latency to retain customers in the face of rising competition.

"Latency is a key driver; it will unlock experience for the customer, to get them to use more data services."
Pienaar said the industry would see more sharing infrastructure deals, "not only sharing of base towers, but fibre-optics".

He noted that of the group's 6 600 sites, more than 2 500 were shared with partners.
"It's the only way to bring costs down," he said. On data revenue, Pienaar said: "It's a volume game."
He also pointed to growth opportunities in the lower end and rural segments for the group.



mtn group  |  cell phones


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