MTN Sudan Will Boost Revenue, Subscribers This Year, Chief Executive Says

MTN Group Ltd. (MTN)’s Sudanese unit, the North African nation’s second-largest mobile-phone company, said it’s targeting a 50 percent increase in subscribers this year as it seeks to boost revenue to help offset a new government tax.

MTN Sudan expects to raise its market share to 35 percent by the end of 2012 from 27 percent last year, Chief Executive Officer Muhammad Ziaullah Siddiqui said in an interview in Khartoum on Jan. 13. The company estimates it will have 9 million subscribers by Dec. 31 and revenue of $5.7 million, compared with $4.4 million in September 2011, he said.

“Sudan is a fast-growing market and we look forward to further strengthening our position” by introducing new technologies, Siddiqui said.

Sudan’s mobile-phone market has grown from 25,000 subscribers at the end of 2000 to 21.6 million people registered with MTN Sudan, Kuwait-based Zain (ZAIN)’s unit Zain Sudan, the country’s biggest operator, and state-owned Sudan Telecom Co. (SUDATEL), according to TeleGeography, the Washington-based research group. Mobile-phone penetration in the country was about 50 percent in mid-2011, leaving “plenty of room for growth,” TeleGeography said in a report last month.

Under Sudan’s 2012 budget, the country will increase sales and services taxes for telecommunications companies to 30 percent from 20 percent, while a tax on profit will be raised to 30 percent from 15 percent, to compensate for the revenue the government lost when oil-rich South Sudan declared independence in July.

“The new tax rise will definitely reduce revenue for us and reduce services available for customers, but I think we can still absorb it,” Siddiqui said.

Secession

After South Sudan’s secession following a peace agreement in 2005 that ended a two-decade war between the north and south, MTN Sudan had to reconfigure its Sudanese network in the south to be a separate operating entity. Since December, the operations of the telecommunication company in the new country are housed under MTN South Sudan. Before independence, southerners accounted for 20 percent of subscribers.

“The secession hasn’t affected us significantly, because the number of subscribers in the north has been growing non- stop,” Siddiqui said.

MTN Sudan has 200 mobile-phone base stations across Sudan, as well as 32 service centers, two of which are in the western region of Darfur.

MTN Group, based in Johannesburg, is Africa’s biggest mobile-phone company, with operations in 23 countries in Africa, Asia and the Middle East. As of 30 June, MTN had 152.3 million subscribers worldwide, according to its website.

There are no immediate plans by MTN Sudan to trade its shares on the Khartoum Stock Exchange as the company has no need to raise funds domestically, Siddiqui said.

MTN shares rose 0.9 percent to 134.22 rand at 1:58 p.m. in Johannesburg. The stock has dropped 6.7 percent so far this year, underperforming a 4.5 percent increase in the benchmark FTSE/JSE Africa All Share Index (JALSH) over the same period.

To contact the reporter on this story: Salma El Wardany in Khartoum at selwardany@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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