MTN Group to Spend $1 Billion on Fast 3G Wireless Stations
November 10, 2011, 12:18 AM ESTBy Sikonathi Mantshantsha
(Updates with share price in fifth paragraph.)
Nov. 9 (Bloomberg) -- MTN Group Ltd. plans to spend about 8 billion rand ($1 billion) to increase the number of third- generation wireless stations for faster data transmission in South Africa, and may install quicker technology if the government approves a license next year.
“Data is the future,” Lambo Kanagaratnam, chief technology officer at the South African unit, said in an interview at the AfricaCom conference in the southern city of Cape Town. “Within the next two years we will more than double the 3G base stations in the country.” Africa’s largest provider of mobile-phone services currently has about 3,000 3G wireless base stations in South Africa, which carry both voice and data traffic, said Kanagaratnam.
MTN aims to double its revenue from data services in the next four years to bolster growth as it foresees no major acquisition opportunities, Chief Executive Officer Sifiso Dabengwa said on Aug. 17. MTN and other African mobile-phone operators are betting 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 will focus its data infrastructure investment in the rural areas of Africa’s biggest economy, which are underserviced by other providers, said Kanagaratnam. “That will help to bridge the gap between those who have Internet connectivity and those who don’t.”
MTN fell 2.4 percent to 135.70 rand at 4:16 p.m. in Johannesburg. The stock has risen 1 percent this year, giving the company a market value of 256 billion rand.
LTE Pilot
MTN also plans to roll out faster long term evolution, or LTE, data technology, said Kanagaratnam. “We’re currently conducting a pilot study on the technology, which is newer and better than 3G,” said Kanagaratnam. MTN will deploy LTE in areas where there is high demand for data, he said.
“We are seeing a lot of demand for data services as more people are able to afford smartphones and use them to download data,” said Kanagaratnam.
At speeds of up to 65 megabits per second, LTE can be used for television broadcasting and downloading large amounts of data, Kanagaratnam said. MTN hopes that by the second quarter of next year the South African government will make a decision to award an LTE license, said Kanagaratnam.
MTN aims to invest 22.2 billion rand in infrastructure in its 22 African and Middle Eastern markets in the next four years, Dabengwe said in August.
--Editors: Robert Valpuesta, Kenneth Wong.
To contact the reporter on this story: Sikonathi Mantshantsh in Cape Town via smantshantsh@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at Kwong11@bloomberg.net
