MTN to pay $3bn for upgrades in Nigeria

MTN Group will spend more than $3bn to upgrade and expand the infrastructure of its operations in Nigeria over the next three years to improve the quality of its service in its biggest market.

“We’ll continue to invest at this rate in the medium term, and make sure the overall quality of service is acceptable,” CEO Sifiso Dabengwa said on Thursday.

Mr Dabengwa acknowledged that MTN has challenges with quality of service driven by the “high demand” in Nigeria.

In the first quarter of this year the Nigerian regulator banned three of the country’s four cellphone companies, including MTN, from selling SIM cards for a month.

The Nigerian Communications Commission (NCC) ordered them to improve their service before lifting the embargo. Mobile phone companies were also fined.

MTN reacted by adding 482 2G stations and 597 3G stations so far this year.

The company increased its subscribers to 57.2-million subscribers in Nigeria in the quarter ended March, MTN said in its latest update in April.

Its 49.3% market share makes MTN the largest operator in Africa’s largest economy, with a population of about 174-million.

The company aims to push its subscriber base beyond 60-million this year with a target to sign up 5-million new users.

Analysts said this week that they believed Nigeria remained a key market for the group.

Research from London-based Informa Telecoms & Media estimates that cellphone user numbers will grow to more than 200-million in Nigeria over the next three years.

MTN would defend its presence in Nigeria despite the challenges it faced, said International Data Corporation telecommunications analyst Spiwe Chireka. “From the group’s perspective it’s a promising market,” she said.

The Nigerian market is extremely important to MTN, said Africa Analysis director and analyst Dobek Pater.

“It is the biggest consumer market and a key market apart from South Africa and Iran, and (is) still expanding,” said Mr Pater.

“It is still a potential enterprise market for MTN Business and we will start to see that happening … two to three years from now.”

The latest expenditure guidance means MTN will lower its capital investment expenditure on cellphone towers and fibre from the $1.2bn it spent in each of the last four years.

In the year to December MTN spent R14.3bn building base stations and rolling out fibre networks in the cities.

Last year the company installed 1,607 new 3G sites and 2,743 3G towers, it said.

Mr Dabengwa said MTN is continually in touch with the NCC to make sure it delivers on its mandate and that it maintains a good working relationship.

“In every country we operate in we make sure our position is clearly understood,” he said.

“We engage constructively not only with the regulator but with policy makers as well.”

A major problem for the company as it embarks on its operations in Nigeria is the violence that terror group Boko Haram has been inflicting upon the northern states of the country.

In addition to assaults on the security services and government infrastructure, the Islamic group has attacked and destroyed private infrastructure.

In 2012 a suicide bomber targeted MTN’s and Bharti Airtel’s facilities in the city of Kano, while 31 towers were damaged in another bombing in September of that year.

“The security situation in the north is of concern, but that is something the government and security establishment are managing,” said Mr Dabengwa.

He added that the terror activity is confined to a limited area of Nigeria and does not significantly affect the company, which he said would continue to support the security forces.

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