MTN admits Cyprus headache

MTN says that, while the current financial woes in Cyprus will impact on its business, the country remains a long-term commitment for the group.

Cyprus has become the latest financial headache in the Eurozone. A report issued out late last week indicated a total rescue package of €23 billion is needed by the island in the Eastern Mediterranean Sea.

As recently as February, MTN, through its wholly owned subsidiary, MTN Dubai, agreed to acquire a 50% equity interest in MTN Cyprus from its local partner, Amaracos Holdings. The transaction will increase MTN’s ownership interest to 100%.

This transaction, MTN said, formed part of strategy to consolidate its investments and would provide further opportunities to accelerate its product and service offerings to the Cypriot market.

Since 2008, MTN Cyprus has grown its market share from 14% to approximately 33% and subscribers from 105,000 to 316,000 as at 30 September 2012.

The country boasts a population of just over 1.1 million people.

Nik Kershaw, executive of investor relations at MTN Group, told BusinessTech: “The current financial situation in Cyprus will clearly impact the overall economy as well as our business. However, we remain well-placed in the market, and remain committed for the long term in the country.

MTN Cyprus recently launched in initiative for more affordable prices in response to the crisis:

“MTN creates new plans that provide permanent, affordable solutions to consumers affected by the crisis…

“MTN responds with dignity and sensitivity to the new demands society is facing and sends a message of solidarity to consumers and employees. It adapts its plans and announces sustainable facilitations that give new customers the ability to pay less, make more savings and enjoy more privileges.”

Sudan

MTN’s Kershaw also provided brief insight into the group’s challenges in Sudan, a country in which MTN has close to eight million subscribers, and generated revenue of R2.158 billion for the year ended December 2012.

In Early April, data published by Sudan’s central statistical bureau pointed to a country in financial crisis, with inflation up to 47.9%.

Sudan’s population exceeds 34 million, while mobile penetration in the country is 67% (according to analysts Wireless Intelligence), while the average revenue per user is at $6.90.

“The current high inflation environment has been a challenge in 2012, through to 2013. Despite the tough environment during 2012, the business performed admirably,” Kershaw said.

“Looking forward, managing costs continues to be a focus for MTN throughout the group, particularly where we operate in high inflation environments as is the case with Sudan,” Kershaw said.

MTN Sudan faces stiff competition in the North African country, with four other providers. However, the group recorded a 3.9 percentage point improvement in market share in 2012.

Looking at its subscriber guidance for 2013, MTN said it hoped to add 1.35 million new customers.

MTN, which has a market value of approximately R304 billion, has operations in 22 countries across Africa and the Middle East. These countries include Syria, and Iran which are also suffering sociopolitical unrest and sanctions.

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MTN admits Cyprus headache