MTN has announced that they plan to significantly increase investment in their South African network over the next year, with the aim of improving coverage and quality. This move will be backed by a capital expenditure allowance which is almost double that of last year.
Speaking at the company’s year-end results presentation, group President and CEO, Sifiso Dabengwa, said that South Africa will see the majority of the capital spending increase, with an approved sum of R10 billion, which is up from last year’s R5.67 billion.
Overall, the company has upped its capex from the R25.4 billion which was spent last year, to the R29.7 billion projected for this year. The next largest capex investment after South Africa will be seen in Nigeria which has been allocated R8.8 billion for 2015.
The primary target of the investment is to allow the company to act on its strategy of growing data revenue.
Data has been identified as a major growth area for MTN. Their data revenue in South Africa accounted for 23.8% of total revenue in the year-end 31 December 2014.
“Our objective is to get data revenue beyond the 25% level within the next four years. The reality is that the competitive space is volatile, so at some stages we have to be aggressive from a pricing perspective. Despite this, we are investing in and are committed to increasing data traffic.” said Dabengwa.
Part of this strategy is a focus on MTN’s ‘digital journey’. This sees the company looking at services that go beyond traditional voice and SMS, where operators are seeing an erosion of revenue as Over-The-Top (OTT) players are offering competing data-based services.
“We will have a big focus on music this year and are investing in [our video-on-demand offering] FrontRow. Ultimately, we are trying to match what the OTT players are doing.” Says MTN SA CEO Ahmad Farroukh.
With the increased network investment “[MTN] will not have any coverage capacity technology differentiation between us and any player in the market”.
He has also stated that within half a year load-shedding will no longer be an excuse for quality of service shortfalls on the part of MTN.
“In six months, [load-shedding] won’t be an excuse. We operate in places like Sudan and Nigeria, so no one is as much a specialist as we are when it comes to dealing with electricity challenges.”