MTN Guinea: Great Ambition in a Small Market

MTN Guinea, one of the major operators in Guinea, has a subscriber base of 2.8 million people. It is a subsidiary of MTN Group, a South Africa-based multinational mobile telecommunications company that operates in many African, European and Asian countries. In November 2015, MTN Guinea said that in the next two or three years, its mobile signals would cover all of Guinea. In addition, it will improve network performance in order to seize more market share. Recently, ZTE Technologies interviewed Themba Mkhululi Khumalo, CEO of MTN Guinea (Areeba). He talked about his career, MTN Guinea's achievements and opportunities, overall strategy, main challenges and key targets in 2016. He also shared with us his expectations for ZTE and his views on future trends in the global telecom market.

Could you introduce your career history?

I am Themba Mkhululi Khumalo, CEO of MTN Guinea (Areeba). I have a Masters in Electrical Engineering from the University of Iowa. I joined MTN in South Africa at the introductory stage of GSM in 1994 as an engineering manager, responsible for site implementation.
MTN SA had just been launched following successful GSM license award as one of two GSM operators. Our main objective was to urgently close the coverage gap between us and the main player at the time, Vodacom SA.
I began my career in telecommunications in 1982 with Swaziland Posts and Telecommunications Corporation, which is a government-owned fixed line operator. I was responsible for a number of projects ranging from satellite earth station management, transmission planning (wireline, UHF radio and microwave systems) and left in 1991, when I was head of network operations (access, transmission, switching and customer services). I relocated to South Africa.
At MTN, I have had a wide and rich career spanning many countries in various disciplines. I served MTN Swaziland as CTO from 1999 to 2003 and subsequently CEO in same country from 2003 to 2007. I subsequently served as CEO in Rwanda and Uganda from 2007 to 2012, after which I returned to MTN Group as an Operational Executive responsible for 13 tier-3 countries of the Group.

What are the major achievements of MTN Guinea in the past year?

MTN Guinea (Areeba) has been a special case in many respects; a small market in challenging times with intense competition and the scourge of Ebola. The business lost its market leadership in 2013.
The major achievements of the company in this period have been to focus on strategic issues that will help us attain a good position in the competitive environment. We have achieved a high quality network for our customers in both 2G and 3G services. In these difficult times, it was critical to review total cost of operations (TCO), which led to a major national radio network swap-out.
We swapped out the Ericsson radio network for ZTE equipment, including the national backhaul links. Throughout this process, we also modernized our network to ensure improved customer experience. In addition, we stabilized the company from market share decline and addressed a number of fundamentals internally and externally to ensure that we have a robust asset to compete effectively in the market.
All these initiatives have helped us deliver the best quality services and experience.

Africa has been the fastest growing telecom market in the world. What opportunities do you see for MTN's growth in Guinea?

Guinea has a potential of becoming an economic engine in West Africa. The country has huge deposits of bauxite, diamonds, gold and super quality timber amongst others. Infrastructure development has a long way to go, but it presents huge opportunities for the government and the country.
MTN Guinea is positioning itself to deliver world class telecommunication facilities and provide a good environment for investors. We are a strategic party in the development of Guinea. It is vital that we develop key strategic partnerships with selected vendors to secure successful delivery on this promise.

As CEO of MTN Guinea, what is your overall strategy to ensure its sustainable development?

One of our business objectives is the development of local human resources to run our operations. MTN has its roots in Africa; we take this seriously as we believe that an investment in human resources will ensure sustainable development.
Moreover, we are cognizant of the technological roadmap for telecommunications to guide our investments towards the future. Outsourcing of support functions has been the key to our strategy.

What are the main challenges in your role? How do you tackle them?

Skilled labor shortage, utility power availability, indirect taxes, and changing tax regimes have all had a negative impact on business. The first two are well managed and we deliberate investment plans addressing these issues.
An unstable tax environment is creating an uneasy situation for shareholders and investors. We have TARTEL which takes 3% of gross revenues, and TCT that increased our headline tariffs by 14%. The worst impact is that it is paid to the regulator on both billed and free minutes, thus eroding value directly and limiting incentives that operators use to stimulate usage. We endeavor to strike a balance on these conflicting demands, but traffic volumes are severely impacted with a loss of revenue to both government and operators.
Fuel supply and distribution is a big contributor to costs with limited national power generation and limited power distribution network. Our power systems have been redesigned smartly with hybrid systems and fuel telemetry systems. ZTE was our partner in both these systems with their existing solutions portfolio.

What is your plan to expand your network capacity? What are your major concerns for capacity expansion?

We expanded our radio network aggressively in 2014 and 2015 in order to provide both capacity and expanded 3.5G coverage. More focus will be placed on expanding high demand areas, particularly in Conakry, to deliver on our promise.
LTE is of interest; however, spectrum and regulations are concerns. More engagement with authorities is planned.

How would you comment on ZTE in terms of project execution capability? How do you think the partnership between MTN Guinea and ZTE will evolve?

ZTE has played a pivotal role in our modernization process. During the worst Ebola outbreak, ZTE did not abandon us and run, like some other vendors did. This was greatly appreciated.
Overall, ZTE delivered on the projects successfully. Any challenges that arose due to our particular locations were resolved amicably. What is vital to us as an operator is to have a reliable partner that delivers on its promise.
I think the traditional relationship between supplier and operator has no place in our new business; suppliers have to become an integral part of the solutions we deliver.

What are the key targets of MTN Guinea for 2016? 
2016 will be a recovery year. Our focus areas are market share growth, value share growth and exceptional customer experience.
We are consolidating our quality in key identified areas to attract and defend our high value customers. Our global solutions will be developed to capture a lion's share of the business in Guinea.

What are some of the new trends in the global telecom market?

Increasing innovation and optimization of cost structures will continue to occupy the minds of operators. The business model of telcos is now rapidly changing with increasing competition from non-traditional adjacencies. The need to reinvent telecoms is now more pressing than ever, some of these inventions will be led from emerging markets with a different set of problems in a global context. 
Telecoms are now global, and any solutions that will not take this into account will not be sustainable. Our business and regulations will need to be borderless to remain relevant and protect the massive investments made by traditional telcos. Resistance to change will only lead to a catastrophic failure of our industry.