Ralph Mupita, group chief executive officer of MTN, has disclosed that the telecom company spends spends more than $2 billion on Network Infrastructure.
Mupita who made this disclosure while speaking during a PSG webinar hosted by broadcaster Bruce Whitfield said the consolidation of the telecoms sector is inevitable, as the market is heading towards a saturation point.
According to him, high capital investment requirements make it increasingly difficult for smaller operators to keep up.
Speaking on the amount spent on network infrastructure by the telco, Mupita noted that this sort of spending means smaller market players are going to find it difficult to compete.
“The days of five- or six-player markets, or even four-player markets, not just in South Africa but more broadly across our markets, are no longer sustainable,” Mupita said.
““Having a market that is saturated by a number of players is not sustainable. There is simply not a big enough profit pool to meet the right return and other financial objectives of a number of industry players. Consolidation is inevitable because the amount of capital investment required to move from 3G to 4G and ultimately 5G is of such a nature that number threes, number fours, number fives cannot make a decent return on their invested capital.”
“Within the next few years, we will see a sector dominated by two to three major players who have the capabilities and capacity to rally massive amounts of capital investment locally and abroad to sustain the industry’s expansion.”
Even the vast US market only has three national mobile operators, he said.
He also said it’s important for regulators across Africa to create a predictable regulatory environment to make planning and investment easier. This includes ensuring operators are given sufficient spectrum.
Spectrum is the oxygen of networks. The more spectrum you have, the more efficient you can be.
Mupita, who leads Africa’s biggest telco, with 272 million subscribers, also gave a glimpse of the strategic shift of focus by MTN, which he said is indicative of the group’s broader objective to consolidate its business model and move decisively towards solidifying its position as a truly Pan-African company.
This shift, he said, includes the process MTN Group embarked on of spinning off its fintech division and it will be looking to bring in strategic investors into the group’s fintech business to bolster its expansion in the space.
Turning to the recent spectrum auction in South Africa, during which MTN secured 100MHz of additional frequencies, Mupita said the country “probably lost a decade and a half of development” due to the delays in allocating access.