MTN outlays $490-mllion capex to bolster mobile network

Africa's largest mobile-phone company, MTN Group Ltd, plans to spend 4.6 billion rand ($490 million) in 2009 for upgrading its mobile network in South Africa, chief tchnology oficer Sameer Dave said in Johannesburg on Saturday.

The spending is part of the Amido project, in which two separate networks, one carrying voice and the other data, are being replaced by a single network to be completed in 2011,  Dave said.

Last year, MTN South Africa spent 4.8 billion rand upgrading the network, setting up 483 sites for voice traffic, compared with a target of 305 new sites, Dave said, adding that data usage increased by 70 per cent in 2008 and while voice calls increased by 33 per cent.

''We are expecting about the same amount of growth,'' in voice traffic in 2009 ''and are very positive that data growth may double this year,'' he said.

This will cut the company's operating expenses by as much as 15 per cent because of the migration to the new network and the company's programme to start providing its own fiber networks, Dave said. In the province of Gauteng, 135km of  a 200km loop has been completed, and a 5,000km national fibre network is being built in partnership with Neotel Ltd.

When its networks are fully operational, MTN South Africa will no longer have to spend about 900 million rand a year leasing lines from Telkom South Africa Ltd.

''During 2009, the complex migration of the network from its original ATM and TDN networks to the NGN (or IP) will continue with the consolidation of the 2G and 3G platforms, while phasing out the legacy switches.

''MTN's move towards an NGN is an integral part of the natural evolution of being a mobile operator. The project will improve existing platforms and roll-out new platforms to enhance data connectivity speeds and voice coverage,'' explains Dave.

Meanwhile, the company has completed a due diligence investigation on its plan to sell 5-6 per cent of its shares to black investors.

The company said in February that the Black Economic Empowerment (BEE) deal will be delayed because of severe constraints in the current financial markets.

Black shareholders, including top MTN managers, own 13 percent of MTN through a company called Newshelf 664 -- a stake the company values at 24.4 billion rand ($2.59 billion). That deal was due to unwind on December 22.

To facilitate the deal, MTN would acquire Newshelf at a discount of about 8 perc ent to the market value of Newshelf's MTN shares.

The company said the acquisition of Newshelf would result in an immediate reduction of about 1.6 per cent in the total number of its shares in issue.

MTN eyes 51-per cent stake in Congo firm
MTN said it may buy ZTE Corp.'s 51 per cent stake in Congo-Chine Telecom SARL, a mobile-phone company in the Democratic Republic of Congo to widen its lead as the biggest wireless operator in Africa.

Negotiations to sell the country's third-largest wireless operator, valued at about $400 million, may stretch beyond this year because of the financial crisis, he said. MTN declined to confirm or deny the discussions.

A purchase would allow MTN to expand into a market that's forecast to add 25 million subscribers over five years as 85 per cent of people there still have no mobile phones.

Congo-Chine, established in 2000 between ZTE and the Congo government and launched in 2002, has 13 per cent of the nation's mobile-phone market after South Africa's Vodacom Group Ltd. and Kuwait-based Zain, Kang said.

MTN's profit last year climbed 44 per cent to 15.3 billion rand ($1.6 billion) after its operations in Iran and Nigeria helped the company's number of subscribers increase 48 per cent to 90.7 million.

Earlier this month, MTN chief executive officer Phuthuma Nhleko said in an interview that the company is seeking ''a meaningful'' acquisition this year to add to its operations in 21 markets. The South African carrier wants to start operations in Angola and Ethiopia, he said.

Last year, MTN failed to close two deals with Indian companies. Talks with Reliance Communications Ltd., India's second-largest mobile-phone operator, ended without an agreement because of ''legal and regulatory issues,'' and talks with Bharti Airtel Ltd. ended because agreement on management and ownership structures could not be reached.