MTN has been rated the best mobile network in South Africa that boasts the most advanced networks on the continent. The company is now increasingly focused on delivering relevant digital services to the local people. Godfrey Motsa, CEO of MTN's South Africa unit, explains how it is driving digital transformation in South Africa.
MTN witnesses strong competition in the South Africa yet remains a strong player. What makes MTN SA such a strong player in the market?
There are a number of factors. The first one is the partnership with our technology partners. As an example, we are No. 1 in the technology space because of the infrastructure that we've built. We have the best network in the most important areas—one of them is in the Western Cape, which is undertaken by ZTE. Therefore, to compete in the telecom space, the first thing you need to do is to build a strong network.
Of course, you need a strong distribution, a strong brand and competitive offerings. These are what keeps us in the game but the foundation is the network. The network comes from the equipment that you deploy, from the services that you have, from the features that you have, and from the partners that help you manage it from end to end. What keeps us in the game in South Africa and be the No. 1 network is the network that you have built.
The digital consumption is rising rapidly. How did you manage to maintain the best network quality?
We are all on our way to digital revolution. The digital revolution is mostly enabled by the smartphone. If you look at the smartphone penetration in South Africa, it is over 60 percent. From the operator's side, we've invested a lot in smartphone penetration. But the smartphone has to run on a strong network and you need to have applications on that as well. It's a game of partners. You need to make sure that you put a strong network in place, that your customers have the smartphones, and that you present the opportunities for them to leverage all the digital services that come out of that.
One of our strategies is pushing digital services. One of the things we've done is the launch of Ayoba. We have strong ambitions for it, the "Wechat of Africa". We've also launched mobile money in South Africa called MoMo. Things like video, payment, music streaming, gaming and lifestyle are really important in helping us push the digital revolution.
But the traffic is skyrocketing and we continue to invest in the infrastructure. So to your point, how do you balance the traffic growth, the consumption of digital services, and still keep the Bozza quality network? At MTN, it is basically continuing the investment and making sure that you balance the game.
The fierce market competition is resulting in lower margins. What steps have you taken to protect your heavy investment?
We spend most of our money on Capex. We are running a Capex envelope of 8-9 billion rands. We are also spending 4 billion rands on the Opex for the network. The first place to start, when you are looking for savings and efficiency, is the people like ZTE. That's why we are always demanding the best equipment, the maximum capacity at the lowest possible price. I think we are really grateful that we have partners like yourself. You understand our pains. You understand that we serve the emerging market customers so that our ARPUs are lower than those of the developed markets. But, of course, we should be able to balance the investment, the equation, and the return that comes out of that. Now it is again the partnership that is really important for sustainability.
What kind of explorations does MTN wish to make in the 5G era?
I think, of course, the future is 5G. It is worth mentioning that MTN SA is the first network to trial 5G technology successfully indoor, outdoor and in mobility environment. We have done a massive trial with ZTE in Cape Town for AfricaCom 2019. It was well received. In pushing 5G, we are working with our government to make sure that we get the right spectrum for it. But we are also working with our partners like ZTE. We are impressed by the end-to-end approach that you are looking at—from the radio to the transport, to the core, and also to the services. 5G is the evolution we will see and 5G is going to be service-intensive. It is important for us to take advantage of that. We are really excited about 5G.
How has been the cooperation between ZTE and MTN in the 5G field?
Nowadays, the partnership with ZTE is really fantastic. As I mentioned, the premier event on the continent is AfricaCom. We did AfricaCom in Cape Town, which is basically a ZTE region for MTN. It was really successful. We are looking at the opportunities of how we can stabilize things further. Besides applications, the primary thing is still the 5G terminals. We are looking at that as well with ZTE, and we are impressed by the roadmap and the lineup of the 5G terminals coming out of the ZTE factory. We are optimistic and excited about our strong partnership on 5G as well. We are going to build mutually beneficial businesses together.
What's your long-term goal and overall strategy for sustainable development?
I think, as a business, especially in the space we are in, the long-term gain is about winning with customers. We all know that customers' needs are changing all the time. We also know that technology is rapidly evolving. So it is to never fall behind the curve from a customer's perspective and from a technology's perspective. For these things to be realized on a sustainable basis, we need strong partnership. You need different people working together as partners to deliver for the society.