MTN Insists on Pursuing More Markets

MTN may have lost out in the duel to acquire a telecommunications licence in Myanmar, but the operator is not about to bow out of the race, nor is it out of doors to knock on.

The winning bidders are entering a country analysts peg as one of the world’s last telecoms frontiers, with less than nine per cent of its 60 million-strong population currently connected.

By the middle of this year, MTN expects to have signed up a total of 200 million subscribers across all its operations after boosting its base 4 per cent in the four months to April, reaching 197.4 million customers.

The group, Africa’s largest cellular operator, said it expects to deliver improved organic growth in both revenue and earnings before interest, tax, depreciation and amortisation this year, and anticipate reaching the milestone of 200 million subscribers by the middle of the year.

The licence agreements require Telenor and Ooredoo to launch services within nine months after finalising the licences, a process expected to close by September. They will have to provide voice services across three-quarters of the country and data services across half of it  within five years.

IDC said while Myanmar would have been a key area of growth for MTN, it is not the be all and end for the yellow network.

While opportunities within emerging markets, like Asia and Africa, are not as abundant as they once were, they are certainly not non-existent, especially for a capital-heavy company like MTN.

MTN currently has operations in 21 countries across Africa and the Middle East. In terms of further opportunities, IDC cited African examples like Angola, Zimbabwe and Ethiopia: “MTN is looking at Africa, the back door, and has already made its mark in Ethiopia [through a value-added licence] where the penetration rate is about 21 per cent, making it one of the fastest growing markets.

In Angola, where there are talks that the country may be issuing a third mobile licence, MTN makes no secret of the fact that it wants to go into the market. And then there are the rumours that just won’t go away that MTN is making a move in Zimbabwe through its third largest operator, NetOne.

Africa Analysis analyst Dobek Pater said, in terms of continuing to explore its options in Myanmar itself, MTN may consider a number of possibilities.

“MTN could wait for the networks to develop a bit and buy one of them, or it could participate as a mobile virtual network operator at a later stage. Partnering with one of the licensees, as Orange did in Uganda, is another option  or the company could enter the market as MTN Enterprise at a later stage, if possible.”

Pater said, however, emerging markets outside of Africa are growth markets that are attracting larger global operators looking for new expansion areas  and this increases MTN’s competition.

“Developing markets are becoming gradually saturated with service providers and services, and they offer less of a greenfields opportunity than in the past. MTN would need to look for an acquisition or alternatively begin setting itself up for more fixed-line/Internet service provider type growth in the business sector as the business market evolves and has greater need for ICT services.”

Ovum’s Richard Hurst echoed the overall sentiment that greenfields opportunities  like Myanmar  are dwindling, but agrees there are other opportunities that will emerge in the republic “as this is considered the first round or stage of the market liberalisation”.

Hurst said it is expected that soon other licences, such as long distance and Internet service licences, will be offered to prospective bidders.

He said MTN is not through eyeing or pursuing high growth-rate areas. “I think MTN will continue to look for similar opportunities in other countries where there is a high grow rate. However, the greenfield opportunities such as Myanmar are becoming fewer and the markets are becoming extremely competitive.”

Hurst expects MTN to “pick its battles” carefully and focus on managing the risk in emerging markets.

Analysts have long said, with the changing face of telecoms in Africa and globally, everything points to consolidation in the market. For players like MTN, Hurst said, growth will be more acquisitive than organic.

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