JSE-listed cellular operator, MTN Group, this morning told analysts it has approved a budget of R30.6 billion for capital expenditure in the 2008 financial year.
This is almost double the R15.3 billion spent in the 2007 financial year. This morning, MTN president and group CEO Phuthuma Nhleko explained that this capital expenditure was critical for the business going forward.
"2008 will have to be a large capital expenditure year if we are to fully exploit the growth opportunities in the regions we operate in," he said.
Nigeria, SA and Iran will together receive R22 billion of the planned infrastructure budget. Nigeria, SA and Ghana were highlighted as regions that were urgently in need of infrastructure spend.
Rob Nisbet, MTN group FD, explained: "The South African network quality is not what it needs to be. In Nigeria and Ghana, the telecoms regulators have prevented us from doing promotions at times due to our high congestion rate and quality of service concerns. Going forward, we believe the revenue will follow though from this capital spend; perhaps not immediately, but definitely in the short- to medium-term."
MTN's South African operations now have 14.8 million subscribers, up 17% year-on-year. In the year ended 31 December 2007, this region delivered R28.2 billion in revenue. Nhleko explained that high demand had required the local operation to re-evaluate its network capacity.
"Laying of our own fibre cable is a key priority in this region. In the last financial year, we rolled out 359 2G and 378 3G base stations," he revealed.
Nigeria continues to be MTN's strongest revenue and subscriber producer. In 2007, the region grew subscribers by 34%, to 16.5 million. Revenue increased 30%, to R20 billion. During the year, the company rolled out 785 base stations.
Ghana saw subscribers increase 55%, to four million. Revenue in that region came in at R3.7 billion.
MTN's Iran operations increased subscriber numbers by 3 800%, to six million. Although the region made a loss, Nhleko is confident it could deliver as much traffic as SA by the end of the 2008 financial year.
"Demand has continued to outstrip supply in our key markets. We must embark on an aggressive infrastructure roll-out to ensure capacity and quality. We have already seen some of our infrastructure roll-outs gathering momentum in the second half of last year. Going forward, we must ensure there are appropriate levels of capacity and quality for both new and existing subscribers," concluded Nhleko.
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