SA’s MTN and Portugal Telecom vying for partnership with MTC

NAMIBIA’S sole mobile telecommunications provider, MTC, has recommended to Cabinet that 34 per cent of its shareholding be sold to a foreign partner for strategic reasons.

This would be either MTN of South Africa or Portuguese Telecom, MTC MD Bengt Strenge said last week. “Yes, it is correct that a submission is on its way to the Cabinet (prepared by the Ministry of Works, Transport and Communication) for a decision about a strategic new partner,” Strenge confirmed by e-mail.”The two ‘finalists’ are MTN from South Africa and Portugal Telecom from Portugal.”Strenge said a bid and evaluation process had been underway since the middle of last year, but declined to discuss who MTC’s preferred partner would be.”I cannot reveal the conditions of the bids or who is the preferred future partner, as the technical committee who has been driving the process on behalf of MWTC (the Ministry) is under strict confidential arrangements,” he said.The move by MTC has been anticipated for some time, since deregulation of the telecommunications market has been in the offing since 2003.The actual deregulation, which will include opening up Telecom Namibia to competition, appears to have run afoul of bureaucratic wrangling, as the new Telecommunications Bill, now three years overdue, has still not made it to Parliament, Dr Chistopher Storch of the Namibia Economic Policy Research Unit (Nepru) noted.At the end of 2004, the Namibia Communications Commission (NCC) invited and received two bids, one from a Chinese consortium with local links, and NamPower in partnership with Telenor of Norway.While NCC’s Chairman, David Imbili, initially indicated that the bid would be decided upon within a month or two, a year and half has now passed.Imbili’s excuse was that the matter was “highly technical” and could not be rushed.Part of the delay has been misgivings about allowing two parastatals – Telecom and NamPower – to compete in the same market.SWEDES BOUGHT OUT In 2004, Namibia Post and Telecommunication Holdings (NPTH) bought out the Swedish shareholding in MTC for N$300 million.Both NPTH and NamPower are owned by the State.MTC remains enormously profitable.The most recent financial statements available (2003-2004) show that MTC made a Gross Operational Profit (before tax, less finance charges) of N$354,345 million.Gross revenue for the same period amounted to N$687,32 million, with direct costs reported at N$170,16 million.Taxes paid to Government amounted to N$119,019 million.In an interview last week, Strenge said that in the past financial year (2004-2005) MTC had an operating cost of N$592 million, which included taxes payable to the State.”Our own telecommunications costs amount to approximately 0,56 per cent of this,” which included costs of goods sold, inter-connection costs, roaming expenses, sales and marketing.Strenge declined to give a specific breakdown.HIGH APPROVAL RATING The sole mobile operator claimed to have a high rating in terms of client and dealer satisfaction: an ongoing survey done by Synovate (with offices in South Africa, the United Kingdom and Cyprus) showed that dealers gave them a 75 per cent rating, while clients gave them a 76 per cent approval rating, Strenge said.This is, however, at variance with anecdotal evidence: Asked to explain how they measured this factor, Strenge said clients were asked if they would be willing to change their mobile phone numbers, if another operator opened for business in Namibia.Much of how this rating was achieved would depend on the weight given in assessing specific results, said industry expert, Nepru’s Storch.Pushed to justify the rating (similar ratings, for example, in Sweden seldom give approval rates over 65 per cent), it emerged that clients’ actual approval rating of MTC’s efficiency was 43 per cent.Strenge and his staff however protest that the perception of MTC as an over-priced service was both inaccurate and unfair: compared to certain packages offered by the likes of MTN, Vodacom and Cell C in South Africa, MTC’s service was actually cheaper, Strenge argued.And with Namibia’s widely dispersed population, MTC has achieved 87 per cent coverage.But in closer comparison with other packages on offer from South African and Botswana providers, it would appear that MTC was comparing its apples with a case of apples, Storch said.”MTC remains one of the most profitable operations of its kind in southern Africa, in spite of the small local market.The fact remains that the telecommunications industry, unlike elsewhere, remains highly restrictive and expensive – especially insofar servicing the poor part of the population is concerned,” he said.* John Grobler is a freelance journalist; 081 240 1587″Yes, it is correct that a submission is on its way to the Cabinet (prepared by the Ministry of Works, Transport and Communication) for a decision about a strategic new partner,” Strenge confirmed by e-mail.”The two ‘finalists’ are MTN from South Africa and Portugal Telecom from Portugal.”Strenge said a bid and evaluation process had been underway since the middle of last year, but declined to discuss who MTC’s preferred partner would be.”I cannot reveal the conditions of the bids or who is the preferred future partner, as the technical committee who has been driving the process on behalf of MWTC (the Ministry) is under strict confidential arrangements,” he said. The move by MTC has been anticipated for some time, since deregulation of the telecommunications market has been in the offing since 2003.The actual deregulation, which will include opening up Telecom Namibia to competition, appears to have run afoul of bureaucratic wrangling, as the new Telecommunications Bill, now three years overdue, has still not made it to Parliament, Dr Chistopher Storch of the Namibia Economic Policy Research Unit (Nepru) noted.At the end of 2004, the Namibia Communications Commission (NCC) invited and received two bids, one from a Chinese consortium with local links, and NamPower in partnership with Telenor of Norway.While NCC’s Chairman, David Imbili, initially indicated that the bid would be decided upon within a month or two, a year and half has now passed.Imbili’s excuse was that the matter was “highly technical” and could not be rushed.Part of the delay has been misgivings about allowing two parastatals – Telecom and NamPower – to compete in the same market. SWEDES BOUGHT OUT In 2004, Namibia Post and Telecommunication Holdings (NPTH) bought out the Swedish shareholding in MTC for N$300 million.Both NPTH and NamPower are owned by the State.MTC remains enormously profitable.The most recent financial statements available (2003-2004) show that MTC made a Gross Operational Profit (before tax, less finance charges) of N$354,345 million.Gross revenue for the same period amounted to N$687,32 million, with direct costs reported at N$170,16 million.Taxes paid to Government amounted to N$119,019 million.In an interview last week, Strenge said that in the past financial year (2004-2005) MTC had an operating cost of N$592 million, which included taxes payable to the State.”Our own telecommunications costs amount to approximately 0,56 per cent of this,” which included costs of goods sold, inter-connection costs, roaming expenses, sales and marketing.Strenge declined to give a specific breakdown.HIGH APPROVAL RATING The sole mobile operator claimed to have a high rating in terms of client and dealer satisfaction: an ongoing survey done by Synovate (with offices in South Africa, the United Kingdom and Cyprus) showed that dealers gave them a 75 per cent rating, while clients gave them a 76 per cent approval rating, Strenge said.This is, however, at variance with anecdotal evidence: Asked to explain how they measured this factor, Strenge said clients were asked if they would be willing to change their mobile phone numbers, if another operator opened for business in Namibia.Much of how this rating was achieved would depend on the weight given in assessing specific results, said industry expert, Nepru’s Storch.Pushed to justify the rating (similar ratings, for example, in Sweden seldom give approval rates over 65 per cent), it emerged that clients’ actual approval rating of MTC’s efficiency was 43 per cent.Strenge and his staff however protest that the perception of MTC as an over-priced service was both inaccurate and unfair: compared to certain packages offered by the likes of MTN, Vodacom and Cell C in South Africa, MTC’s service was actually cheaper, Strenge argued.And with Namibia’s widely dispersed population, MTC has achieved 87 per cent coverage.But in closer comparison with other packages on offer from South African and Botswana providers, it would appear that MTC was comparing its apples with a case of apples, Storch said.”MTC remains one of the most profitable operations of its kind in southern Africa, in spite of the small local market.The fact remains that the telecommunications industry, unlike elsewhere, remains highly restrictive and expensive – especially insofar servicing the poor part of the population is concerned,” he said. * John Grobler is a freelance journalist; 081 240 1587