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MTC Results: Yes, more subscribers than the population

Mon, 8 April 2013 02:56
by Business Writer
Business

MTC conducts business as a registered telecommunications provider. The principle nature of the business is to invest in the telecommunications infrastructure of Namibia for provisioning of total communication solutions to the customer base.  The services include pre-paid and post paid services, voice bundles, data bundles, free mails, SMS and voice mails.
Although MTC is an autonomous Namibian company, it also provides international telecommunication solutions through direct liaison with providers of telecommunication services worldwide. The nature of the business did not change during the year under review. MTC also lets properties through a company called Jurgens 34 (Pty) Ltd.
MTC is owned 66% by Namibia Post and Telecommunication Holding Ltd (NPTH) and 34% by Africatel Holding B.V.  NPTH holds shares again in rivals Leo and Telecoms while Africatel Holding BV, operates as a holding company and provides telecommunication services. The company is based in Amsterdam, the Netherlands. Africatel Holding BV operates as a subsidiary of Portugal Telecom SGPS SA.
During the financial years under review, MTC reported revenue of N$ 1, 617 billion which represented a growth of 11, 3% compared year on year. This was as a result of MTC’s strategy to maintain the current customer base and acquire the majority of new subscribers. An EBITDA of N$ 859 million was reported, representing a growth of 11, 0% while Net Income soared to N$352.5 million representing a 10.6% increase from the previous year.
Of the total revenue, 56% which is N$905m come from prepaid customers, 36% -N$501m was revenue collected from post-paid customers including data devices, 5% of the revenue which is N$80.8m come from selling of handsets while roaming fees where N$64m representing a 4% share of the revenue. Interconnection fees were 3% of the total revenue representing N$48m and N$16m received from other services.
It is worth noting that pre-paid an post paid services constitute the bulk of MTC revenue hence its business. The SIM connection of MTC has grown past 2 million subscribers. I know there has been a debate previously of how can MTC have subscribers which are more than  the population of Namibia? Yes it’s possible. Multi-SIM cards are normal where subscribers are accessing the same information from several devices; smartphones, tablets and laptops. Some even have more than two SIM cards.
Data usage on MTC networks was up 1.8 folds with revenue increasing 28%. This translates to Mobile Broadband accounting for more than 9% of total revenue.
Looking at the graphs above, a lot of people are accessing data through their phones. However a glance at the revenue generated show that smartphone access to data is relatively cheaper to users than 3G and 4G.  Going forward the penetration of smartphone users and 4G will increase tremondiously more than 3G. Competition from Leo and Telecom in smartphones and 3G arena will leave MTC to advance with 4G before the competition catches up.
Investment in the Mobile Broad band field to accommodate huge demand which is coming through video cloud and LTE in future have consumed 80% of the CAPEX spending. A substantial growth of N$ 170 million from N$ 236 million in 2011 to N$ 406 million was accounted for as Capital expenditure for the year under review.
The majority of the investment was on the technical side. This amount exceeded the net profit after tax by 15% and was at the same level as the highest amount invested per annum in 2010. With the demand of the promotions strategies in terms of voice calls and sms, and significant demand for data services, there was a substantial increase in volume of traffic on the MTC network, which in turn required the investment to increase network capacity.
MTC was the second company in Africa to deploy 4GLTE. This was a welcome move, however the success of 3G, if 4G come in will be cut short and additional infrastructure upgrading and investment will be needed in terms of building additional NodeB`s (base stations). The base station construction and infrastructure upgrading had faced bureaucracy from local authorities and at times there was frustration and tensions because of misaligned interest. With the 4G campaign having received an accolade award for second best Africa Marketing Campaign for 2012 by AfricaCom (Informa Telecoms and Media) we believe MTC will do more to educate consumers especially the local authorities on the need and importance of more base stations. One wouldn’t doubt that we will be bombarded left right centre with jingles and adverts for MTC in the near future.
Given the strategic advantage that Telecom Namibia`s acquisition of Leo have on them, MTC should prepare for stiff competition and cutting some profits a bit in the near future. Previously MTC used to be a bully to Leo but I doubt if that can be done now. We as customers are very happy now and believe that it’s now time for the telecommunication companies to innovate and continue to give us cheaper and affordable services.
Worldwide telecom companies are now invading banking space, instant payment. We foresee MTC taking that space or partnering with banks to provide that solution because people now need quick solutions. Comparative advantage for MTC still remains to be the faster implementer and taking new technology from technical partners.  With a good pile of cash MTC will do more than just dishing 100% profits to shareholders every time.
Up to this end MTC is still a privately held company. With the country`s financial markets seeking to be broaden I believe this is one company, if listed on Namibia stock exchange can unlock value to the general public and investing companies.

Both reviews by The Villager economic columnist, Mr. T. Email: tawazhanje@gmail.com