Expansion opportunity for MTN Cyprus

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 20 Oct 2008

JSE-listed MTN group concluded a joint venture with Amaracos Holdings on Friday, which will give its Cyprian operations an expanded distribution network.

"The aim of this joint venture is to differentiate and extend the ownership of MTN Cyprus, affirming MTN's commitment to empower its presence in the local market," said MTN Cyprus CEO Bassel Jamaleddinec, at the launch event, held in Nicosia.

The Cyprus venture with Amaracos is expected to give MTN access to Internet and fixed-line markets.

SA's mobile giant traded 49% of its Cyprus operations to Amaracos in May, for 100% of electrical and telephone handset retailer Infotel and Otenet, a fixed telephony and Internet service provider in Cyprus.

According to the specifics of the deal, MTN continues to be responsible for managing the operations of MTN Cyprus, and Amaracos is expected to provide MTN Cyprus with significant local insight into the Cypriot market.

“This transaction is intended to broaden the ownership of MTN Cyprus and further reaffirms MTN's commitment to enabling greater local representation in the countries in which it operates,” said MTN Group president and CEO Phuthuma Nhleko at the initial announcement in May.

MTN has played in the Cyprian market since late 2006 when it spent $5.5 billion to take over Investcom. MTN Cyprus holds an estimated market share of 16% of the Cyprian mobile phone industry.

Nhleko added that MTN Cyprus will now have a “wider distribution platform and will also be well positioned to provide fully converged telecommunications services to our valued customers in Cyprus”.

The company has not been quiet about its intention to expand in emerging markets, and already operates in 21 countries across Africa and the Middle East. Its Cyprian venture boasts 128 000 subscribers, according to the figure in its interim financial results released in August.

While the company did not release specific figures of the country's financial growth, the entire North Africa and Middle East region for the company did show EBITDA margin pressure through the half-year. The company will likely welcome distribution expansion in the region.

MTN attributed the 4.1% drop to operational costs and poor performance from MTN Cyprus's Southern sister company in Sudan. MTN Sudan lost 3% market share in the region over a regulatory issue that forced the company to drop 1.1 million customers.