South Africa now has the same spectrum as neighbouring countries even though they have smaller markets
MTN boss Ralph Mupita contends that the delay by the South African government in the release of spectrum cost the country about a decade and a half’s worth of development.
Speaking at a PSG Think Big webinar this week, Mupita said that MTN South Africa has 179 megahertz of multiband spectrum — after the recent spectrum auction — and “that’s the same as Zambia, which is a much smaller market … Markets like Nigeria and others have more spectrum.”
Now that the auctioning of spectrum has been successful — with MTN paying more than R5-billion for it — Mupita said: “We are happy that the multiband spectrum auction finally came through after many, many years of waiting for it. And we probably lost a decade and a half of development in South Africa because of it.”
The revenue from the auction amounted to R14.4-billion, which will go to the national fiscus.
“Spectrum is the oxygen of networks. The more spectrum you have the more efficient you can be. We want universal access for everybody in terms of the ability to connect and at a decent price and spectrum has a role to play in that,” he said.
Mupita said that new technologies such as 5G will need a lot more spectrum but “what we secured now will help us for the next three to four years”.
Expanding on the abilities of 5G, Mupita said that the “Elon Musk dream is well within our reach”.
5G entails machine-to-machine communication and enabling driverless vehicles — “which is not a far off reality for South African consumers”, he said.
Regarding Nigeria, MTN’s biggest market, Mupita said the country has significant growth opportunities and that this market will continue being part of MTN in the long term despite difficulties.
“Nigeria is 40% of our earnings so it’s not a business we can say is trivial or small. We believe we need to make it work. We feel Nigeria will continue being, in the medium and long term, an important part of the MTN group. There’s enormous opportunity in Nigeria,” he said.
The South African telecoms giant was fined $5.2-billion, which was later negotiated to $1.5-billion, by the Federal Government of Nigeria through the Nigerian Communications Commission (NCC) for failing to disconnect unregistered subscribers in 2015.
Earlier this month, the NCC announced that all operators are required to restrict outgoing calls for subscribers whose SIM cards are not yet linked to their national identity numbers.
MTN Nigeria subsequently received a formal directive from the NCC to implement a phased suspension of services to affected subscribers, placing them on “receive only” status with effect from 4 April this year, the group said in a statement.
“As in any market, you have to navigate the risk environment and manage the stakeholders well. Nigeria is a market that we are determined to make work. Of course, once in a while there are bumps along the way, but if you look at the return profile on the initial capital … its given investors over the last 20-years an exceptional return even on a risk adjusted basis,” said Mupita.
MTN started its Nigeria operation in 2001.
“In our last reporting period we had about 272 million subscribers with Nigeria being the biggest by some distance — 68 million subscribers. In South Africa we have 34 million subscribers. South Africa and Nigeria are our two largest markets, basically giving us 100 million subscribers within these two markets,” he said.
MTN generates almost half of its revenue in the oil-rich west African nation. In its year-end results for 2021 it said that group revenue grew by 18.3% to R171.8-billion, led by growth of 6.5% in MTN SA and 23.2% in MTN Nigeria.
“We really want to simplify the group and focus and allocate our human resources capital on the African continent. We’ve exited Syria, Yemen and we are looking at exiting Afghanistan. Our strategy is to exit the Middle East and be a Pan-African business,” Mupita said.
Anathi Madubela is an Adamela Trust business reporter at the M&G
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