MTN CEO warns “destructive” rivals

MTN Group president and CEO Sifiso Dabengwa believes that the mobile sector in South Africa, as is already happening in saturated markets in Europe, will consolidate as the war for subscribers intensifies.

Speaking at a press conference at the company’s headquarters in Johannesburg on Wednesday (14 August), Dabengwa said there is no room in the local market for a profitable fourth player.

MTN Group reported a marginal improvement in revenue for its South African operation in interim results for the six months ended June 2013, to R20.14 billion, from R19.86 billion before.

However, earnings before interest , taxes depreciation, and amortisation (ebitda) declined to R6.5 billion, from R7.03 billion in 2012.

The group also noted that its total subscriber base for South Africa declined by 400,000 to 25 million, having reported a decline of 470,000 customers in the first quarter (from January 1 and March 31).

“I don’t think there is space for four (operators in South Africa), Dabengwa told journalists. He said that, amid increased saturation, “consolidation has to happen”.

The company lead said that in discussion with regulators across numerous markets and territories, it has become clear that “some players are going to fall by the wayside”.

He said further that in some markets where the fourth, fifth or sixth, player will never deliver returns, “they start doing very destructive things in the market in the hope that it will improve their position”.

Dabengwa’s sentiments echo those of Cell C CEO, Alan Knott-Craig, who recently said that it was probably too late – by as much as seven years – to have a fourth operator in the market.

Cell C launched in 2001, as the country’s third mobile operator, joining MTN and Vodacom. Rolling on nearly ten years, Telkom launched its own mobile division, 8ta in October 2010. The 8ta brand has subsequently morphed into a new brand, Telkom Mobile.

Knott-Craig opined that operators needed a minimum of 25% market share in order to be profitable.

MTN is not the only company to feel the pinch of a saturated market as, in July, Vodacom noted that its customer numbers in SA declined 2.3% year-on-year to 29.282 million, from 29.971 million in 2012.

In afternoon trade on the JSE, shares in MTN climbed 1.45% or R2.85 to R198.81, a fraction off its intraday and indeed all time best figure of R199.50.

More on MTN

MTN continues to lose SA subscribers

Vodacom: the good and the not so good

Mobile subscribers in SA: who’s eating whose lunch?

No space for 4 mobile players in SA: Knott-Craig

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MTN CEO warns “destructive” rivals