M-Cell says MTN International is starting to come online in all its targeted regions and could be a major contributor to its profits in the near future.
While the company`s networks in Swaziland, Rwanda, Uganda, Cameroon and Nigeria were responsible for only around 9% of revenue, M-Cell says these operations were key in its earnings growth.
Spending on rolling out a network in Nigeria, where an 80% owned company was launched in August, has been below budgeted figures. While small in size, the Swazi, Rwandan and Ugandan networks maintained profit margins significantly higher than the flagship network in SA. In Cameroon, however, MTN has been losing money since last year.
"This is the one place we believe it could be better," says Lazarus Zim, MD of MTN International. He blames a delay in reaching an interconnect agreement with other operators in that country and says everything is being done to rectify the situation.
There is also concern about interconnect agreements in Nigeria, the cash black hole which saw a 37% rise in gross profits translate to a 5.5% increase in headline earnings. The company has invested around R2.7 billion in the country to date.
Zim says there is as yet no legislation allowing for an interconnect agreement between MTN and Nitel, the Nigerian fixed-line operator. The operator has also failed to produce enough capacity for calls to be transferred from one network to the other. But Zim says the issue has been taken up by the highest level of government and "indications are that this will be solved by early to mid-December".
Nigeria is expected to make a significant contribution to profits in the 2003/2004 financial year. With a population three times that of SA and a teledensity of 0.4%, it is expected to be a veritable cash cow.
However, the R2.7 billion MTN has invested there to date has analysts worried that should it not meet expectations, the entire company could suffer. Vodacom CEO Alan Knott-Craig has cited this as one of the reasons his company did not expand into Nigeria.
The newly formed strategic investments division of the company, which owns satellite business Orbicom and the 60% share MTN recently acquired in Internet service provider Citec, has also been active in Africa. MTN CEO Paul Edwards says a recently launched electronic funds transfer operation in Ghana has been a huge success and negotiations are underway to expand it into Uganda and Nigeria.
Related stories:
Africa is our rand hedge, says Vodacom
Share