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MTN Group SWOT & PESTLE Analysis

ID : 5246353 | Feb 2017

OVERVIEW

Name of the Company: MTN Group

Business Sector: Telecom

Operating Geography: Africa, Asia and Europe

About the Company: MTN Group is a multinational telecommunications company operating across the African continent and few Asian and European countries. Founded in 1994, it is headquartered in Johannesburg, South Africa and employs close to 20,000 people as of 2016. South Africa and Nigeria are its major markets jointly contributing to approx. 63% of revenue.

Revenue: Rand 146.89 billion– FY ending Dec 2016

SWOT & PESTLE Analysis

The SWOT analysis for MTN Group is presented below:
Strengths
Weaknesses
1. Strong brand with largest market share in 15 countries
2. Huge subscriber base with more than 240 mn customers
3. Comprehensive range of innovative products and services
1. Major setback in Nigerian operations with NCC imposing a penalty
2. Currency fluctuations in major markets
Opportunities
Threats
1. Digitization to drive growth of telecom players
2. Huge potential in Iranian markets after sanctions removal
1. Power shortages across Africa affecting telecom infrastructure
2. Political developments and unrest across MENA markets
2. Political developments and unrest across MENA markets
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Strengths

1) Strong brand with largest market share in 15 countries: MTN is a top global brand and features regularly in top 500 global brands. It was also South Africa’s most valuable brand as of 2016, for a fourth consecutive year. MTN’s excellent network coverage and high capacity has proved to be a key differentiator which has helped it to achieve number one operator in 15 out of 22 markets it operated in 2015.

2) Huge subscriber base with more than 230 mn customers: It offers segmented voice and data services to more than 234 million subscribers across 22 markets as of Q3 2016. However, with the SIM registration mandate in Nigeria, there was a temporary 6.9% fall in users to 57.04 million in the country in Q1 2016 which again improved by Q3 2016 to almost 60.5 million subscribers. With close to 52 million 3G-enabled devices on network, MTN is continuing to invest and expand its 3G and LTE networks and the overall growth prospects in its major markets seem bright over the next 4 years.

3) Comprehensive range of innovative products and services: MTN offers its customers a complete range of services. MTN has more than 80 companies providing 5000 content services under its lifestyle offerings and it is the largest distributor of music in Africa. Its joint venture (JV) with Middle East Internet Holding (MEIH) is an e-commerce start-up which aims to establish its base in the attractive Middle East markets. Its JV with Africa Internet Holding (AIH) is making steady progress and clocked 4.4 million transactions in 2015 with more than 2.3 million customers on-board. MTN Mobile Money an e-wallet had 35 million across 15 countries as of 2015.

Weakness

This section is available in the Complete Report

Opportunities

This section is available in the Complete Report

Threats

1) Power shortages across Africa affecting telecom infrastructure: The greatest threat facing telecom sector across countries in Africa is the shortage of electricity. Power problems in the region have not only hampered the growth of the industry and has also affected the health of the telecom infrastructure as frequent power outages have tendency to damage the sensitive and expensive equipment in the telecom towers. Currently two-thirds of the population in the continent (600 million people) do not have access to electricity. South Africa, the most industrialized nation in the continent still suffers power shortages in many regions as of 2017. The country has insufficiently invested in new projects and distribution and infrastructure maintenance. Outside South Africa, the situation is even more bleak, with the remaining 47 countries generating less power annually than Spain. Even alternative power solutions such as reusable/green energy, solar energy, and wind hybrids have not been implemented due to red tapism and bureaucracy in governments. Until, the African governments liberalize the power sector, there will be limited private investment and the telecom industry will continue to suffer due to power shortages.

2) Political developments and unrest across MENA markets: There have been major political developments and ongoing unrest in some major Middle East and North Africa (MENA) markets where MTN operates. Syria is a major market for MTN where political unrest and terrorism has been ongoing since 2011. There has been a decrease of almost 50% of the country’s population and its currency significantly depreciated. MTN continues to operate in safe zones near the capital Damascus and other coastal areas but the current business environment is challenging and risk prone. Yemen, another market for MTN also is going through a period of civil war and unrest which has resulted in destruction of infrastructure. Afghanistan and Sudan have also challenging business environments with ongoing civil and regional conflicts. Though the current prospects look grim, there may be good growth opportunity in the above markets if situation stabilizes and there is country rebuilding.

MTN SWOT analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.
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The PESTLE analysis for MTN Group is presented below:
Political
Economical
1. Political turmoil, terrorism threat and unrest across MENA Markets may impact MTN business growth
2. High corruption levels and bureaucracy in many African markets
1. Investments in power infrastructure required by African economies
2. Volatile currencies in markets where MTN operates affects telecom investment sentiment
Social
Technological
1. MTN recognized as being citizen-centric organization
2. Rise in disposable income in the Sub-Saharan markets to benefit telecom sector
1. Digitization to bring opportunities in cloud and analytics
2. Mobile wallets and content based offerings - an emerging business segment
Legal
Environmental
1. Setback in Nigerian Operations with NCC penalty
2. Increase in regulatory demands delay decision making and business growth
1. Implementation of alternative energy mechanisms
2. E-waste management initiatives
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Political

1. Political turmoil, terrorism threat and unrest across MENA Markets may impact MTN business growth: Middle East and Africa (EMEA) is a major market for MTN and several countries in the region have also been impacted by civilian unrest and terrorism impacting business. Syria is undergoing a civil war which is in its 6th year so is Yemen with the civil war having destroyed the country. The recent blockade of Qatar by other GCC nations also complicates the stability of the GCC region. The increasing threats are increasing the business risk and may impact MTN’s growth.

Social

1. MTN recognized as being citizen-centric organization: MTN was recognized as being most citizen-centric organization with focus on Education, Health, Arts and Culture, and Entrepreneurial Development. MTN leverages its technological expertise and communication infrastructure to improve access in areas such as education and healthcare and encourage entrepreneurship. In South Africa, the company has partnered with National Department of Basic Education in creating digitized content language manuals with interactive learning techniques. Further the company provides online technology training in Oracle and Java in Nigerian as a part of MTN Foundation Scholarship. These initiatives by MTN are in line with the social factors and requirements in the geographies where it operates and show that it is a citizen-centric organization.

2. Rise in disposable income in the Sub-Saharan markets to benefit telecom sector: Over the past decade the Sub-Saharan Africa has seen growth with new market opportunities starting to emerge With disposable income rising, the market has witnessed changing consumer needs, easier credit access and investor confidence. Also the continent has one of the youngest work force on the planet. With regards to the telecom sector, the region has also seen an increase in mobile penetration and spending, a trend which is expected to benefit MTN.

Environmental

1. Implementation of alternative energy mechanisms: Implementation of alternative energy mechanisms helps organizations to increase efficiency, decease costs and also importantly decreased its exposure to carbon tax. As of FY16, MTN has covered a total of 10,454 sites, data center switches, hubs and offices where implementation of energy-efficiency solutions had been implemented. Further MTN also owns and maintains a total of 340 solar and solar-hybrid sites.

2. E-waste management initiatives: MTN is working towards e-waste management and green infrastructure to reduce non-renewable waste. In FY16, MTN recycled 537 tons of e-waste, 1808 tons of waste and saved 15,646 kg of paper. In an initiatives to strengthen the e-waste awareness and collection, MTN has partnered with Ericsson in Benin, leveraging Ericsson's global Ecology Management Product Take-Back Program.

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Copyrights and Disclaimer

MTN PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting. Copyright of MTN SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions page for usage guidelines.