Industry must prioritise investment, says MTN South Africa CEO

Operators need to partner with regulators and suppliers to enable sustainable, long term investment in communications infrastructure if Africa is to become globally competitive. That was the message hammered home by MTN South Africa CEO Karel Pienaar during the operator keynote sessions at AfricaCom 2010, in Cape Town.

Much has been made of the potential for growth in the African telecoms sector and Pienaar said that growth can only come from such investment. MTN has invested $3bn in infrastructure over the past year. Extending connectivity to rural Africa is likely to be the dominant topic at this year’s event and Pienaar said that penetration rates in the low single figures were not acceptable.

Targets are essential to bringing about improvements to these figures, he said, suggesting that ensuring 50 per cent penetration for household internet connectivity by 2020 could be one such aim.

Positive developments in technology should help to bring about such improvements. “All of our investments are going rural,” Pienaar said. “The technology is so ripe for that, now. Base station power consumption is down 70 per cent. We’re deploying solar and wind power solutions. The economics for this kind of thing are becoming so much better.”

Alternative power solutions can also be used to bring down the large carbon footprint of the African communications sector, Pienaar added. He warned that this is an area of the industry that is “still being ignored” in Africa.

Increased competition is also important for growth, Pienaar said: “It’s difficult for me to say this as an old monopolist but competition is good.” However, he said he was “not a fan of ‘cream skimming’ operators” that focus exclusively on dense urban areas and/or wealthy customers. He argued that operators should be forced by regulators to focus on entire markets, thereby working to bring services to as many Africans as possible.

Mobile termination rates, a pain point for many operators in developed markets as regulators have forced them down, do need to be reduced in some African markets, Pienaar said. But again he stressed that this would be best done in balance with the need for continued investment.

Addressing a lack of sophistication in segmentation strategies, Pienaar joked that “we have two segments; prepaid and postpaid.” MTN South Africa is beginning to market prepaid data services, he said, and while mobile voice remains the killer ap in Africa, the MTN group has targeted data revenue growth as essential for the business. The average contribution of data to overall revenues across the MTN group is just 1.35 per cent, he said, and the firm has targeted an improvement to 20 per cent over the next five years.