MTN Uganda says syndicated loan to fund 4G network expansion

by Reuters 0

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The Ugandan unit of South African telecoms giant MTN Group plans to spend much of the $114 million loan it secured last month on expanding its 4G mobile broadband network, a top company executive said on Wednesday.

In May MTN Uganda, the country’s largest telecoms firm by revenue and number of subscribers, said it had secured $114 million worth of credit via a syndicated loan for spending on infrastructure.

Brian Gouldie, MTN Uganda’s chief executive, told Reuters the company planned to add between 150 and 250 booster stations to its network, which so far has 85 existing 4G sites.

As popular messaging and other Internet-based applications like Whatsapp, Skype and Facebook displace traditional telephone calls and SMS text messages, MTN Uganda is betting with large-scale investments on data traffic infrastructure to boost profitability.

Internet traffic is MTN Uganda’s fastest growing source of revenue, increasing 76 percent in the year to May 2016.

“We want to make sure we remain ahead of the investment curve … drive data penetration,” Gouldie said.

MTN reckons telecom markets like Uganda typically have the potential for Internet services to reach a market penetration rate of between 25 and 35 percent of the target population but that rate now stands at 9.5 percent in the east African country.

“So the reason we’re investing to the extent that we are is that we are under-penetrated,” he said.

With about six firms, some analysts have said Uganda’s telecoms industry has too many players to be viable.

Most are small though compared with MTN, which has 8.9 million subscribers, controlling more than half of the entire market share, followed in second place by India’s Bharti Airtel.

Although the global commodity price collapse has blunted growth in Uganda and other sub-Saharan African countries Gouldie said the telecoms business was more resilient and would not take a blow from the wider economic slump.

“We’re quite resilient … we’re therefore able to take a long term view regardless of what happens to oil and other commodities,” he said.

Uganda is Africa’s largest coffee exporter and also ships cotton, tea and fish.

It is also looking to start exporting crude oil by 2020 at the latest.

“Some industries are very dependent on them (commodities). Fortunately for us we’re not,” Gouldie said.