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Annual Report : MTN Nigeria   Next : MTN Cameroon
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Review of operations - Contents

MTN Nigeria


  Nigeria financial results

9 034
9 310
4 727
4 883
2 866
3 042

  Market information

  Population (million)
  Mobile penetration (%)
  Mobile market share (%)
  Number of mobile operators

  Operational information

  Prepaid/postpaid mix (%)

  Note: Financial data reflects 100% of the operation
*Excluding deferred tax asset
Total subscribers
MTN Nigeria


MTN Nigeria operates one of four GSM licences and has been in commercial operation since 2001. During the period under review, MTN Nigeria aggressively focused on subscriber growth, supported by rapid network roll out amid keen competition in the market. Consequently, the company significantly increased its subscriber base from 5,6 million to 8,4 million. Coming off a low base, mobile penetration again increased significantly during the period to 13%, reflecting continued demand and intense activity by mobile operators. ARPU declined from USD40 at 31 March 2005 to approximately USD22 by June 2005 mostly as a result of a change in subscriber definition. From June, ARPU has been steady at USD22 despite strong subscriber acquisition at the low-usage end of the market.


MTN Nigeria has 16 Board members, 14 of whom are non-executive directors. The Board has delegated certain responsibilities to three focused subcommittees: audit and conflicts; compensation, remuneration and human resources; and properties. In 2005, the Board approved revised policies covering ethics, business principles, whistle-blowing, document retention and guidelines for the conduct of governmental relations. Procurement standards, policies and processes were enhanced to enable more meaningful support of local suppliers.

Health and safety issues related to base stations and radio frequency are constantly monitored and mitigating steps taken where possible. In addition, MTN Nigeria applies international best practice in complying with local regulations. Specific issues raised by a broad spectrum of stakeholders include noise, air and ground pollution.

The company reaches its stakeholders through multiple communication strategies, from print and electronic media to direct engagement, briefings, symposiums and workshops.


Capital expenditure during the period was USD582 million, resulting in further improvement in network quality and coverage. The number of base transceiver stations rose from 1 662 to 2 120 during the nine months, while switching centres increased from 30 to 35. This has increased MTN Nigeria’s geographic coverage to 348 900km2 or 38% (March 2005: 30%) and population coverage to 64% (March 2005: 58%). Network congestion improved to less than 6% (March 2005: 9%) during peak hour and network availability remained excellent at over 99%.

GPRS has been introduced on a trial basis, with trials expected to be completed in the first quarter of 2006. MTN Nigeria is deploying a national optic fibre backbone to supplement its microwave transmission system. The optic fibre backbone project will be complete by mid 2006 and result in significant improvements in network quality and reliability. During the period, the company installed sufficient core network capacity to comfortably support current strong subscriber acquisition. In line with the MTN Group’s policy of maximising support for local suppliers, MTN Nigeria again increased the percentage of local participation in developing its network infrastructure. Procurement processes have been enhanced, providing a company-wide framework for consistent procurement standards and terms.


Continuing its recent growth trend, penetration in the Nigerian market again doubled during the period. In this highly competitive market, MTN Nigeria is making good progress towards its strategic objective of becoming the pace-setter for customer service in the country. The operation maintained its market share during the period at 47%, with the highest share of net connections. A strong improvement in customer satisfaction was underpinned by the introduction of a new billing system, intensive staff training and enhanced processes in all areas that affect customer service.

Competition intensified during the nine months, predominantly centred on pricing and resulted in high levels of churn between network operators. This impacted on margins in the first half of the period, with the benefits of marketing initiatives and product innovations reversing the trend in the second half.

The company managed to increase tariffs in the strategic reseller market segment without losing market share. Other operators have followed MTN Nigeria’s lead by also increasing tariffs.

The MTN brand remains the strongest in its sector and one of the leaders in Nigeria. MTN Nigeria was voted telecommunications brand of the year by the National Institute of Marketing in October 2005, and enjoys top-of-mind awareness nearly four times greater than its nearest competitor. During the period, MTN Nigeria launched its Everywhere You Go and “friendship is beautiful” campaigns, which were well received. Popular Y’ello music festivals were held in Ibadan, Port Harcourt and Abuja, and the inaugural MTN Trader’s Cup, a football tournament among the big informal trading community in major centres, has provided a new platform to build business relationships with this important market segment. MTN Nigeria also sponsored golf and polo tournaments and an international half-marathon to strengthen its presence in selected postpaid markets.

As a sponsor, MTN Nigeria participated in the International Nigerian Telecommunications Summit.


Several products and innovations were introduced during the period to meet customer demand. BizTime bundles stimulate usage and help postpaid customers control costs through more economical tariff options. GPRS enables mobile phones to send and receive data more efficiently. The very popular MMS enables customers to send messages with picture, sound, video and text. VPNs (virtual private networks) allow companies to optimise intra-group telecommunications costs while MTN Supa Booster offers reduced call rates. Vending Airtime Abroad is a convenient way for friends and family abroad to send MTN airtime from distributors in the UK to subscribers in Nigeria. Recharge incentives proved very successful as did the introduction of lower-denomination airtime cards.

Mobile penetration
MTN Nigeria has extensive wholesale and retail distribution channels supporting 21 distribution depots, 237 appointed distributors, over 7 600 second-tier points, and some 30 000 informal distributors.

Twelve strategically located service centres operate as retail and service points, providing the core infrastructure for after-sales service. Seventeen franchise Connect Stores were operating by period end, with eight new stores to be established in early 2006. The electronic recharging service introduced in 2004 has created an additional distribution channel and is being refined to offer customers more convenience and flexibility.


MTN Nigeria fully complies with local licence conditions and was allocated a new numbering range and additional frequency spectra during the period.

The dispute with the Nigerian Communication Commission on interconnect rates remained unresolved and prices were maintained pending litigation. The collection of interconnect debts from Nitel remains of concern.

The confirmation of MTN Nigeria’s Pioneer Status early in the reporting period reinforces significant tax benefits.Blended ARPU


MTN Nigeria employs 1 836 nationals and 50 expatriates. The company has over 100 training programmes and invested R29,5 million on training in 2005, representing 7 666 training interventions or an average of five hours per employee. In line with the MTN Group policy of skilled employee retention, a phantom share option scheme has been implemented for senior staff. The company has policies governing all regulatory requirements for health and safety in the workplace.


Service is an integral element in the MTN experience. MTN Nigeria addresses the quality of service through 12 service centres, a call centre facility with over 400 prepaid and postpaid customer agents, and specialised agents for electronic voucher distribution and dealers. The call centre handles 1,3 million calls monthly, ranging from enquiries on products and services, promotions, pricing and tariffs, to complaints on network quality, failures, billing and technical support.

Cumulative capital expenditure
MTN Nigeria’s operations have minimal environmental impact: using biodegradable recharge cards and initiating mobile phone waste recycling. The company has environmental management procedures covering general environmental practices, waste minimisation and recycling, energy efficiency and conservation, environmental claims and audits, water management and management of emissions.


The MTN Nigeria Foundation was formally launched in May 2005 and invests up to 1% of MTN Nigeria’s after-tax profits in corporate social responsibility initiatives. With projects in 19 of 36 states and the federal capital, MTN Nigeria was named the THISDAY Corporate Socially Responsible Company of the Year 2005 and its rural telephone project nominated for Best Mobile Community Service Award by the GSM Association in Barcelona, Spain. With focal areas in economic empowerment, education and health, MTN Nigeria is becoming a reference point for government and private-sector sustainability initiatives.

During the period, the rural women’s empowerment telephone project, Phone Ladies, established phone businesses that have benefited 167 women; Phase 2 is expected to involve an additional 220 women. Working with Habitat for Humanity, MTN Nigeria’s low-cost rural housing project has provided 600 new homes.

In its education portfolio, the MTN Foundation has worked with UNICEF to provide basic primary school infrastructure for three primary schools. Twenty four secondary schools in six states have been equipped with computers, servers, internet connectivity, teaching aid software and hands-on teacher training. The MTN SchoolsConnect project has had a direct impact on nearly 50 000 students and over 2 400 teachers. The next phase has already started to benefit 13 additional schools. The foundation’s UniversitiesConnect project in partnership with NetLibrary is providing a digital research library with 125 computers, servers and printers. The first beneficiary was the University of Lagos and the project is set to have nationwide coverage.

In the health sector, the MTN Foundation is working with partners in implementing HIV/AIDS projects on awareness, prevention, voluntary counselling and testing (VCT) and prevention of mother-to-child transmission. Six VCT centres have been established and viable income-generating businesses for people living with HIV/AIDS developed.