The South African based multinational telecommunications group, MTN, has a presence across sub-Saharan Africa and still sees potential for growth in some African countries it has been established in for years. In a recent KPMG Africa conversation series, Khumo Shuenyane – the group’s chief for strategy, mergers and acquisitions – said that the growth potential in Nigeria is still significant.
By May 2012, Nigeria contributed 25.1% of the MTN Group’s total subscribers with over 45 million in the country. “We are obviously a very large player in Nigeria and we have pretty extensive coverage but there is still scope to grow in a number of the rural areas in particular… and increase the growth potential in some of the urban areas as well,” said Shuenyane.
“So our view is that there continues to be very significant growth potential. It is the largest market in Africa. It will very soon be the largest economy in Africa… I suspect. It’s definitely a very important market for us and one that we focus on very strongly.”
MTN expanded into Nigeria in 2001. So what has MTN learnt from doing business in Nigeria? “It’s very important to come to Nigeria, get to understand the environment, get to understand the market, and then apply policies and procedures and a way of operating that is relevant for that market. I think that is probably the biggest lesson,” said Shuenyane. “It is probably the biggest lesson throughout our operations, which is that there isn’t a cut and paste [business model]. There isn’t a South African model that you simply roll out across the rest of the operations. It’s very important to look at each of the countries on their own merits and apply ways of working that are specific to that country.”
With some South African companies struggling in the East African region, MTN is playing the region strategically cautious. MTN has a penetration of about half the market in Uganda and about 70% of the market in Rwanda, according to Shuenyane. It also has a small presence in South Sudan. However, the company is not planning on expanding to the larger economies in the East African region.
“It has been more challenging to get into some of the other markets, so, obviously the key market in that region would be Kenya, followed by Tanzania. The issue with us is obviously we are in a regulated industry and it all comes down to whether there is a licence available and also whether one looks at the market and sees the potential to be a significant player, either number one or a strong number two,” explained Shuenyane. “Our view is that in Kenya clearly those positions are taken up. Safaricom is a very dominant operator in that market and there is a strong number two player. Similarly in Tanzania we have got some of the very biggest operators on the continent, outside of MTN, operating in that market so the scope for the opportunity to get in there and actually become a reasonably sized operator, is low. So we are not actively looking at opportunities in the other countries in East Africa at the moment, but as I say we are a very significant player in Uganda and in Rwanda.”
Drawing from MTN’s experiences, Shuenyane advises that it is extremely important to have local business partners when expanding to an African country. “It is an important part of MTN’s success story in that you ensure that you have people on the ground who understand the local environment, and who can help you traverse some of the local challenges,” added Shuenyane.