MTN reports savings

Johannesburg, 02 Nov 2006

MTN, which agreed to buy Middle Eastern Investcom for $5.53 billion in May, says it has already started seeing savings.

The company recently said it sees between $300 million and $400 million in potential synergy-driven savings between it and the latest addition to its stable. Yesterday, it said it had already seen savings. "Savings in operational expenditure are estimated at $80 million to $100 million."

Savings in capital expenditure are anticipated to reach a minimum $100 million for the 2007 financial year. "Limited savings have already been realised in 2006 and it is anticipated that this will ramp up in 2007."

MTN added that savings in both capital and operational expenditure after 2007 - with softer benefits as it implements group-wide best practices - will make up the balance of its anticipated $300 million in savings.

These best practices are especially in the area of product development and implementation, network roll-out, and operational and support functions.

During its recent results presentation at the end of August, CEO Phuthuma Nhleko said a team was already working on integrating the companies. While unable to provide exact figures regarding costs that could be saved, he said the "low-hanging fruit" amounted to between $300 million and $400 million.