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Headquartered in South Africa, MTN’s footprint spanned 22 countries…
Headquartered in South Africa, MTN’s footprint spanned 22 countries in Africa and the Middle East in early 2017. It was estimated that revenues for 2017 would come mainly from the following regions: South Africa 31%, Nigeria 28%, Iran 12%, Ghana 8% and the Ivory Coast 6%. The remainder of the countries were expected to each contribute 4% or less to total revenues.
Despite its continued success since its listing on the JSE in 1995, MTN has shed 48% of its share price in the past few years. The new CEO Rob Shuter and his finance director Ralph Mupita have ambitious plans to revive the company after several setbacks, such as a huge fine in Nigeria. Shuter has already implemented the BRIGHT strategy based on the following six pillars: best customer experience, returns and efficiency, igniting commercial performance growth via data and digital, hearts and minds and technological excellence.
Referring to prospects for Africa, Shuter states that cellular telephones in Africa are mostly used for basic communication (like voice and SMS messages), but with voice revenues falling globally, data and digital as well as enterprise business are destined to become star performers. “The next 100 to 200 million people entering our market are expected to come from rural areas. MTN will have to provide the right technology to them – not only regarding the networks, but also the appliances that will have to be made available to them. This market comprises mainly young people and they accept new technology much more readily than their parents. MTN accordingly expects a huge upsurge in the demand for mobile internet in Africa”, Shuter states.
Even though MTN operates in six of the 10 most corrupt nations according to Transparency International (South Sudan, Syria, Yemen, Sudan, Afghanistan and Guinea-Bissau), MTN also faced huge challenges such as the US$1.5 billion fine against MTN’s subsidiary in Nigeria that failed to disconnect the unregistered SIM cards of some 5.2 million subscribers in order to comply with new regulations that had come into effect. The original penalty was settled at US$ 1 billion. Shuter maintains that “We are, however, still here (in Nigeria) and I believe the company has a positive future despite the challenges.”
“We are optimistic about growth prospects in Africa and the Middle East. However, our focus remains on our key geographical areas which include South Africa, Nigeria and Iran” Shuter told a conference in Johannesburg. Shuter has specifically flagged Angola and Ethiopia as two countries MTN was keen on entering. Angola has a population of 31.2 million, is characterised by low economic growth and has a mobile phone subscription rate of 55.3 per 100 people. Ethiopia, with a population of about 102.4 million exhibits a higher economic growth rate of 7.4 percent and has a mobile phone penetration rate of 69.9 per 100 people
1.1 Explain why MTN should scan the global business environment as well as the macroenvironments of Angola and Ethiopia prior to their decision to expand operations to these two countries. (9)
1.2 Discuss the major macroenvironmental factors related to both Angola and Ethiopia relevant to MTN. (15)
1.3 Outline any other information that would enhance MTN’s decision-making to expand to Angola and Ethiopia. (6)
Adapted from Louw and Venter (editors) (2022) Strategic Management Towards sustainable strategies in Southern Africa. 4th edition. Oxford
