Eleanor Mitrovich, MTN Branded Channels General Manager (GM) on 6 March 2012 discussed how MTN managed to conquer Africa and the key lessons learned by the organization.
Mitrovich was speaking at the first AfricaPace forum held at the Radisson Blu Hotel, Sandton, Johannesburg.
MTN currently has presence in Africa and the Middle East. South Africa was the first country to launch MTN services in 1994. MTN has been in business for 17 years. Based on the growth and investment to shareholders, MTN has rolled out to the rest of Africa and the Middle East.
Why did MTN do business in Africa?
“Africa is the last growth market in the world,” said Mitrovich.
“Depending on what you’re selling. You can sell religion. It’s big business in Africa, together with the commodities, FMCG (fast moving consumer goods) products and airtime.
Why is Africa the last growth opportunity in the world?
Africa is underdeveloped. Other countries in Africa are investing in foreign investments. They are incentivizing foreign companies to come into their country based on grants – they don’t necessarily have to pay their deportation duties or the taxes for that country.
“If you go to Angola, Congo, Nigeria, Mozambique and Botswana, they are incentivizing foreign investment so as to grow the local economy.”
“When you do business in Africa, the risk is high but the reward is also high. If you understand what the risks are, you will be able to mitigate them,” advised Mitrovich.
“Depending on what industry you are in – the license obligations may be quite large. It can range from launching from a certain date and when you’ve obtained your license.
You have to employ a certain number of local people, with a minimum salary, they dictate in some countries as to how much they’re earning,” said Mitrovich.
“So depending on what industry you’re in as to what the governmental license requirements can be quite prohibiting. You have to understand what these are before you do business in Africa,” said Mitrovich.
“It’s not only in Nigeria, even Iran, Sudan or anyone of those countries, it’s the same.”
It’s not only in the telecoms industry, we build shops, we print marketing material, we buy advertising, we have network infrastructure. All of those have requirements attached to them.
According to Mitrovich, in Nigeria, if you import printed collaterals, you pay 130% importation duties. They want you to use the local environment. They want you to develop the skills locally so it becomes sustainable for them and it builds their economy. That’s the objective. Those are some of the conditions they may or may not grant you a business license.
“ARPU is the Average Revenue Per User and is calculated in the US dollar based revenue.
“South Africa is the top revenue earner at an ARPU of $17,” said Mitrovich.
“The reason for that is that the South African market is different to anywhere else in Africa or the Middle East,” said Mitrovich.
“We sell post paid here,” she declared.
“Whilst the market is still a 70 – 30 split between pre and post, the revenue is derived by a large degree from post paid,” confirmed Mitrovich.
Africa’s pre-paid markets
Mitrovich said the rest of Africa and other countries MTN operates in are pre-paid markets.
“They don’t have a guaranteed revenue stream for a 24 month period, which can’t be accumulated. You operate on a month-to-month basis. The ARPUs are much lower,” explained Mitrovich.
“Interestingly Swaziland has an ARPU of $14 a subscriber.”
Mitrovich said when MTN launches its services in Nigeria, the ARPU was $250 a subscriber.
“It’s dropped down to $10. The reason is MTN has 41 million subscribers in Nigeria.
According to Mitrovich, ARPUs are calculated by the volume of people on the network divided by the revenue they generate.
“With the data growth in the telecoms industry, it’s starting to rise again because data consumption uses airtime.
Bontle Moeng – SME South Africa Online Editor