South Africa’s MTN Group has been in the global news in recent weeks because of the turmoil that the telecoms company has had with its Nigerian unit. The Africa’s largest telecoms operator was fined a massive $5.2 billion by the Nigerian Communication Commission for allowing 5.1million unregistered sim cards on its network in the West African country.
With so much happening to the South African company in recent times, and an uncertain future ahead for subscribers, investors and the company itself, it would be interesting to know how the company that embodies an African success story in the telecommunications industry has come of age.
Here are 10 things that you probably didn’t know about South African telecommunications giant, MTN Group.
MTN Group, Africa’s largest and the world’s 15th largest telecoms company was established in South Africa in 1994 as the only competitor to Vodacom in the country. At the time the company was called M-Cell, and though it was not easy competing with their more established rival at first, they would go on to achieve success in more markets than just South Africa.
The company revolutionised the mobile industry by being only the second telecommunications provider globally to introduce a pay as you go system, which meant that expensive monthly contracts were no longer the order of the day, bringing affordability of cellular services to the market, and allowing for a major boost versus competitor Vodacom with the revelation of prepaid.
Expansion into other parts of Africa began in 1997, with licences acquired in Rwanda, Uganda and Swaziland, where operations began and success soon followed. In 2001 MTN made their mark in West Africa by expanding into Nigeria, and this provided an excellent platform for the company to stretch further into Africa with additional markets including Cote D’Ivoire, Benin and others enjoying the services of the South African business.
Thanks to significant growth on the African continent, MTN Group decided it was time to expand into other parts of the world, with the Middle East presenting as a major opportunity for the company. It turned its focus to opportunities in Iran, Syria and Cyprus, which the company managed to capitalise on. Mobile licences in Middle East countries and agreements or partnerships with local telecommunications companies allowed MTN launch in new markets, culminating with the current spread of 21 countries throughout the world in which the company in present.
The MTN Group overshadows Spotify and Apple in terms of streaming music to the consumer in the continent’s most populous nation. Bloomberg reports that Nigeria’s music industry has more than tripled its sales over the last five years to $150 million annually as mobile downloads surge. MTN is now the biggest music distributor through its ring-back tones, popularly known as “caller tunes”, which were launched in 2008.
In 2010 South Africa hosted the first ever soccer World Cup on African soil, and the competition was a resounding success. One of the major sponsors of the event was MTN, as the first-ever global sponsor of the FIFA World Cup from Africa, with a $65-million deal which gave MTN exclusive mobile content rights for Africa and the Middle East, as well as global marketing rights for the 2010 event. As a global sponsor, MTN joined the likes of Coca-Cola, Visa, Adidas and Emirates at the top level of FIFA sponsorship.
MTN has grown significantly since their launch in 1994, and they are now present in 21 countries including Benin, South Sudan and Cote D’Ivoire in Africa, and Syria, Yemen, Iran and Afghanistan in the Middle East. Their expansion is in line with their slogan, “Everywhere you go”.
In May 2008, India-based telecommunications company Bharti Airtel explored the possibility of buying a 51% stake in MTN Group for a reported offering of $19 billion, according to the Financial Times. That deal did not materialise, and soon after another Indian telecoms company, Reliance Communications, was in talks with MTN for a potential merger, but that also fell apart at the negotiation stage.
The telecoms giant is keen on sports sponsorship, as revealed by their involvement in the 2010 World Cup in South Africa, but they were also responsible for MTN Qhubeka, which was the first African Professional Continental cycling team. Based in South Africa and Italy, they participated in UCI Continental Circuits races, and WorldTour races when invited as a wild card entry. In July 2015, MTN announced they would end their sponsorship of the team.
On November 9 MTN Group CEO Sifiso Dabengwa took the decision to resign with immediate effect in the wake of the Nigerian Communications Commission (NCC) fine, with former CEO Phuthuma Nhleko announced as acting executive chairman for six months until a replacement could be found. With calls for someone within MTN to take accountability for the situation, Dabengwa saw it as his duty to step down, and the market’s reaction showed that the move gave panicked investors some renewed confidence in the company.
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