MTN takes on Vodacom ISP

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 01 Nov 2007

MTN must reposition itself as an Internet service provider (ISP) in order to remain competitive, says Brian Seligmann, MTN`s data and messaging executive.

Speaking at the ITWeb Technology Roadmaps 2007 conference, in Bryanston yesterday, Seligmann said: "MTN has 4.5 million active data subscribers, and yet we still think of ourselves as a mobile provider and not an ISP. We need to start playing the game."

Mobile services are evolving within the context of Internet services and these will be more important than the company`s traditional mobile voice offerings, he explained.

He said with the high levels of mobile penetration, MTN has the potential to dominate in the IP arena. "Mobile Internet will become more valuable than mobile voice services, and if we don`t get involved, we will fail."

The availability of free Internet services, such as instant messaging and VOIP applications, are driving the company to look more directly at Internet services, he noted. "IP [Internet Protocol] services have the possibility to wipe out most mobile revenue."

Head-to-head

MTN is not the first cellular operator to elevate the importance of ISP services within its strategy. Earlier this year, its competitor Vodacom established an ISP business.

In June, Vodacom Group CEO Alan Knott-Craig said the company would look to make a significant ISP acquisition in order to "buy" its way into the space. He told Business Day that the deal would "involve a company roughly the size of Dimension Data`s local operations".

Speaking at the presentation of the company`s financial results, Knott-Craig also said the local operation would follow global trends and set up its own fixed-line network.

"Unlike our other locations, Vodacom SA does not provide its own infrastructure. However, this year will see our first big move into this arena. In all cellular companies around the world, you see a move to fixed-line interests and vice versa. The fact is the only part of mobile that is mobile is the last mile," he said.

Vodacom has since launched YeboNet, its ISP business aimed at the consumer market.

Disappointed by data

MTN`s ISP strategy follows the company`s disappointing data revenue figures released in August. At the time, MTN VP of the Southern and East Africa region and SA MD Tim Lowry said the company`s local data uptake had grown, although it needed to do more.

"Excluding SMSes, about 9% of our local revenue comes from data. However, we have a lot of initiatives in place to grow our data contributions. In the last year alone, we have seen data revenue double from the first to the second half of the year," he said.

The company has historically kept its data revenue close to its chest, declining to disclose its contribution. This has made it impossible to compare MTN`s data performance against that of Vodacom.

In June, Vodacom revealed that in its South African region, data revenue constituted 13% of its total income. This translated into R3 billion for the year ended 31 March.