Johannesburg - MTN Group raised its South Africa investment target by 50% as the continent’s biggest wireless operator by sales looks to boost its data-services offering with acquisitions and network upgrades in its home market.
Capital expenditure will be about R12bn in the country in 2016, MTN’s South Africa head Mteto Nyati told reporters in Johannesburg on Thursday.
That compares with an R8bn target announced by the company in March. MTN spent R10.9bn in Africa’s most industrialized economy last year.
“We are investing for growth,” Nyati said.
“The MTN South Africa board and the board of the MTN Group have not placed any limitations on our acquisition spending.”
The extra cash will help Johannesburg-based MTN’s South African unit keep pace with Vodacom Group, which recently surpassed its cross-town rival to become Africa’s most valuable phone company by market capitalisation.
MTN was part of a legal challenge that prevented Vodacom from acquiring Internet provider Neotel this year, which would have given it a head-start in digital services.
Both companies have been looking for alternative deals. MTN is also spending on improvements to network-service quality and rolling out a 3G offering.
Internet deals
The wireless operator will target deals similar to its $40m February co-investment in Travelstart, an online flight and hotel-booking company based in Cape Town, Nyati said.
Another benchmark deal was MTN’s 2014 purchase of a third of Africa Internet Holding, a joint venture with Millicom International Cellular SA and Rocket International, which owns Africa-focused online retailers Jumia and Zando. MTN has about 229 million customers across 22 markets.MTN scaled back spending targets at the start of the year following a record $3.9bn fine in Nigeria, acting MTN South Africa Chief Technology Officer Krishna Chetty said at the same event. The company is negotiating with the government for a possible settlement.While the full penalty remains unpaid, the South African unit was able to persuade the MTN board that higher network spend was necessary to grow the business and compete better with Vodacom, majority owned by Newbury, England-based Vodafone Group. Nigeria’s capital expenditure target this year has been raised to about $1bn from $700m, Chetty said.MTN shares declined 1.1% to R126.05 in Johannesburg, valuing the company at R233bn. Vodacom was little changed and has a market capitalization of R244bn.