MTN Drives On Amid Rising Risks
BMI expects MTN's investment in South Sudan to massively improve telecoms services in the country, however, gains are likely to be limited in the short to medium term by the country's recent descent into civil war. MTN switched on the first of 161 new base stations in South Sudan as part of a USD76mn investment plan for the country. MTN stated 93 more base stations are now ready to go live and the rest will be switched on by the end of the year, to make its network the largest in the country.
The main goal of MTN's investment is to expand its network to South Sudan's rural areas, where more than 80% of the population lived in 2013, according to BMI data. This should allow it to reach a considerable number of new subscribers, as mobile operators have largely neglected rural areas owing to poor energy availability and transport infrastructure, which push operating and maintenance costs up exponentially. MTN has partially overcome this challenge with the use of hybrid solar and diesel power solutions on its 161 base stations, which should significantly reduce reliance on generator power and diesel consumption.
With all new base stations using 3G technology, BMI expects MTN's network expansion to also have an important impact on South Sudan's broadband market. Several operators have deployed WiMAX services in South Sudan since the beginning of 2012, including RCS Communications and UAE-based Yahsat, but BMI argued that the high cost of broadband services would likely limit take-up among the vast majority of consumers. By comparison, 3G services should be more affordable, while the ever-falling cost of smartphones will also allow a much broader segment of the population to access broadband services. In its Q114 results MTN's largest rival Zain reported a 248% increase in data revenues year-on-year, which though from a low base shows rapidly rising demand for mobile data services.
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