MTN to invest $4B in Africa infrastructure

LUSAKA, ZAMBIA (03/22/2008) Mobile Telecommunication Network (MTN) plans to invest about US$4 billion in upgrading its infrastructure in Africa this year in order to alleviate network congestion and increase subscribers.

MTN, based in South Africa, will increase capacity across the continent and look for investment opportunities in the region and the Middle East, according to MTN CEO Phuthuma Nhleko.

MTN operates in 21 countries in Africa and the Middle East, including Zambia, Uganda, Nigeria, Ghana, Yemen and Cyprus. The company is also planning to buy Internet service providers (ISPs) in countries in which it operates, to provide a fuller range of voice and data services.

This week, the company reported a net profit of about $1.4 billion for the 2007 financial year that ended in December.

The company has been experiencing network traffic congestion in countries including Nigeria and Ghana due to an increasing number of subscribers and a shortage of network capacity.

MTN has also resolved to fully exploit demand this year to avoid losing out on African telecom growth, Nhleko said.

"The significant growth in the number of subscribers outmatched the capacity of the network last year hence we have resolved to fully exploit the demand this year by increasing the network capacity," Nhleko said in an e-mail exchange.

The company’s subscriber base now stands at 61.4 million. Much recent growth came from its $5.5 billion acquisition of Middle East operator Investcom in Lebanon, which has customers both in Africa and the Middle East.

Over the past year, MTN has concentrated on voice service provision. However, data service is becoming increasingly important for MTN's continued growth. This means buying ISPs. Most countries where the company operates have data penetration rates of less than 10 percent. A lack of fixed lines makes wireless the only way to access the Internet.