In 2012, MTN continued its strong growth, delivering over Ushs1 trillion in revenues, mainly driven by 7.7 million subscribers and total market share of 52.5 percent , up from 52.0 percent in 2011. The company fresh from an 86 per cent growth in data revenue, made it known that data revenue was going to be a new battle ground.
Matter of fact the company would deploy a handsome US$80 million in capex expenditure in increased network coverage and data capacity something the company hopes will quickly grow its data customers from the current 1 million. Just a few days ago the company rolled out its Long Term Evolution (LTE) or simply 4G to meet the growing hunger for high performance data connections.
The recently launched LTE technology is said to be limited in scope as it is not compatible with many devices available on the market. Wont it become a white elephant?
“It is true that LTE technology (4G) is available on limited devices such as the Samsung SIII and iphone 4 and 5, which is why we are focusing the limited frequency allocated by the regulator to MTN first deploy LTE for dongles (mobile modems) and office use by corporates.
However that said, the launch of LTE fits within MTN’s vision of being a leading telecoms provider in emerging markets. This means that we must lead change and be ahead of not only the competition but ahead of the customer needs.”
“Realistically the current 21.6 megabytes per second speeds that we had were good enough, but when you want to be at the forefront of data, when you are the leader in the data market with up to 1.2 million data customers, you then want to push the limits.
We feel with speeds of up to 100 megabytes per second guaranteed by LTE technology, we are firmly ahead of our customers’ expectations. This investment has also been advised by growing trends in the demand for data both at the individual and business level.
The data market is growing and we want to be the preferred leading provider of data for individuals, small business and large corporates with needs that span across the country.”
Given the limited scope of devices that are compatible with LTE technology, would it have been better to improve your 3G offering where there is a wider catchment area?
“For example over the last one year or so, since we introduced a free 10MB for our mobile customers, we have witnessed about 500,000 who came on board to explore the internet and many have since stayed.
Although the usage patterns of many of our customers does not require beyond 3G, we are investing in anticipation of increased demand especially driven by the fact that there is a massive younger generation that is internet ready and is joining the market every year.”
Does LTE deliver data at lower cost than 3G?
“Typically, speed and volume is important whether it is edge, GPRS or 3G technology. LTE is not an evolution of previous technologies it is a different network on its own and has its separate frequency therefore it come with its own separate cost.
It delivers great speeds but its infrastructure does not come cheap and international band width is not cheap either. By and large the costing of LTE services is relatively the same as previous networks although the technology may differ because user devices are more expensive.
Once LTE is introduced, only devices of US$ 80 to US$ 100 will access it making it more expensive to maintain for customers. But seen from the advantage side, with greater speeds, you are able to do more in less time.
For example if you have an organisation of 200 people and daily each one of them has been losing up to 10 minutes due to slow networks, with LTE you can be able to save 2,000 minutes which is equivalent to 33 man hours. To an organisation that values its time and productivity of its employees, this is a huge value addition.”
Will the revenue from the short term demand meet the huge costs for deploying the LTE infrastructure? Won’t MTN need to increase service pricing so as to increase revenues to cover CAPEX?
“The reality is there are significant costs involved in the deployment of 4G but over time MTN will be making more money from direct internet sales.
We are not looking to get the investment back as fast because 4G is a long term investment and using it to connect Uganda to the rest of the world will bring in more customers world-wide and in turn return on investment will be achieved.”
“Unlike most telecoms that have a ‘build as they come’ strategy, MTN invests according to anticipated growth going forward which minimizes the risk of interfering with quality data services.
We have invested not only for today but for years to come for local and international bandwidth as well as radio frequency on a national level.”
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