MTN Chief Dabengwa Aims to Double Data Sales in Next Four Years
August 17, 2011, 11:55 AM EDTBy Sikonathi Mantshantsha
Aug. 17 (Bloomberg) -- MTN Group Ltd., Africa’s largest mobile-phone operator, aims to double its revenue from data services in the next four years to bolster growth as it foresees no major acquisitions opportunities.
“I can easily see data going to between 20 percent and 30 percent of group revenue within the next three to four years,” Chief Executive Officer Sifiso Dabengwa said in an interview at the company’s Johannesburg headquarters today. Data services contributed 14.2 percent of the 56.5 billion rand ($8 billion) total revenue in the first half.
MTN and other African mobile-phone operators bet that data demand will continue to rise, making up for sluggish growth from voice offerings, as more consumers use handsets to surf the Web. The company aims to invest 22.2 billion rand in infrastructure in its 22 African and Middle Eastern markets. The operator today reported first-half earnings that missed analysts’ estimates as currency shifts and declines in airtime and subscription sales held back growth.
“Data has to be the main growth engine,” the CEO said, adding that the company won’t make major acquisitions this year because of the current lack of suitable targets.
The company is still looking for acquisitions as any market with a population of more than 30 million and a mobile-phone penetration rate of less than 30 percent is attractive, the CEO said. “But it is also our responsibility not to throw away shareholders’ money.”
Rollout Pace
Most of the regions in which MTN operates have a 40 percent mobile-phone penetration rate, according to Dabengwa. Nigeria and South Africa, MTN’s largest markets in terms of revenue, will get about half of the planned infrastructure investment. The company is upgrading networks to so-called third-generation technology to handle more data traffic.
“We expect to step up the pace of rollout in the second half of the year” to make up for delays in equipment delivery, Dabengwa said.
Adjusted first-half earnings per share rose to 4.70 rand from 4.39 rand a year earlier. That missed the 5.05-rand average of six analyst estimates compiled by Bloomberg. Net income increased to 9.45 billion rand from 8.1 billion rand, while revenue rose 1 percent to 56.5 billion rand.
First-half subscriber numbers gained by 7.5 percent, slower than MTN’s full-year target of a 22 percent increase, while airtime and subscription sales fell 2.8 percent. MTN said revenue growth was hampered by the rand’s gain against the dollar and the Nigerian naira’s drop versus the U.S. currency.
MTN rose less than 0.1 percent to 137 rand in Johannesburg trading today. The stock has risen 1.9 percent this year.
--Editors: Simon Thiel, Tom Lavell.
To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at smantshantsh@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
