MTC Annual Report 2015

MTC firmly believes that technology is a means to an end; the aim being to improve people’s lives. And this is the pillar strategy that the Board of MTC is supporting MTC’s management team with in order to reach that very goal.

I am very proud to be a part of Namibia’s mobile communication partner of choice, demonstrating how every day, on each corner of every city, and in the majority of rural areas, people are using more smartphones to access the fantastic digital world that mobile internet represents: that is, reaching any place in the world with a simple and quick tap of the finger. The flipside to this is the frustration that not all Namibians have access to the same level of technology today, thus leaving a digital divide. However, some important aspects are currently being addressed, in particular our efforts to bring 3G to rural areas over the following months. With time, this will turn the tide and will, in all possibility, help achieve Namibia’s Vision 2030.

Regarding the prioritization of investments, in support of the long term sustainability of the Company, the MTC Board has provided tremendous support to MTC’s management during the last two years to conclude the IT transformation process, which was resolved successfully this financial year, thereby enabling MTC for the future. Once that cant investment was concluded, the Board received a guiding strategy for the next three years, specifically to cantly improve the customers’ experience with data accessibility.

As a final remark, I would like to emphasize that the Board’s decisions relied on two fundamentals: the international partner, and the extraordinary MTC team. Together, they not only helped the Board prioritize and select the correct investments, but also performed an extraordinary execution of the projects that ensued. And to both, on behalf of the Board of Directors which I am honoured to serve on, my sincere thank you for your remarkable performance.

After a consecutive three years of double-digit growth in revenues, this financial year (ended September 2015) shows a high single digit growth of 8%, surpassing 2.1 billion NADs. This financial performance, which maintaining the above strong growth, happen at the time that the pricing model transformation was accelerated: i.e. shifting from a model of traditional voice calls to one of data centricity. Its success execution that MTC is the most developed mobile operator in Africa in terms of offers pricing models equivalent to most developed markets, leading this migration of the business model initiated in 2010 that now can be started to being observed in the most competitive markets in the Region.

This pricing strategy entailed a clean up of our pricing plans to a simple, new integrated monthly subscriptions price plan named ‘Select’. This was targeted for the contract segment, thus removing a confusion of packages. The strategy also accelerated the migration of the prepaid segment into the ‘Aweh’ category with integrated weekly subscriptions and the addition of more choices, as well as cantly increased data usage units (Megabytes). The result is that, as observed, customer behaviour now shows a growth of 51% in data usage without revenue backdrops, which underpins that the correct strategy was deployed to address the transformation from voice call centricity to data usage centricity, which will benefit the company in the long-term protecting from disruptive services over-the-top.

It is as a result of the above strategy that MTC surpassed a milestone of over 45% of customers who were already using data by the end of September 2015, pulling data revenues surpassing 39% that of total revenues. These very cant figures bear the fruit of an aggressive strategy of heavily investing in a network that’s on a par with the most developed countries, encompassing an investment into the submarine cable WACS, a national fibre backbone transmission countrywide with redundancy through SA, and a very wide 3G and 4G network covering all the main cities of Namibia.

If, in May 2012, any doubt existed that accelerating the introduction of the first fully commercial LTE offer on the African continent was possible, the answer has become clear at the end of the period under review, with LTE technology generating more than 43% of the data that MTC’s network is processing.

Volume Usage

Data Revenues

% of service (data & sms) revenues

As a result of that continued demand, MTC continues with its data offer of affordability and capacity, with the outcome being that data traffic has continued its growth to 71.4% as data revenues increased to 49.6%, reaching almost 40% of the total revenues of the company.

It is very important to highlight that during the year under review, MTC’s fibre transmission passed the 4,000km mark, covering the main cities of Namibia: from Windhoek to the coastal cities of Swakopmund and Walvis Bay, to the northern cities, including Katima Mulilo , thus bringing 3G to a total of 33 cities, and 4G to 14 cities in Namibia.

THE REGULATORY ENVIRONMENT

MTC is cognizant and supportive of the principles of the Communications Act commenced on May 2011, and is on board to move the country forward. At the same time, MTC believes that any new Authority requires time to pass the early stage, where regulations fall into place, to reach a maturity stage where in MTC opinion the actual Regulation context has not reaches that desirable stage which will enable a correct balance between consumers demand and industry development, which at the end it maybe the ultimate objective of the Act.

With this factor in mind, MTC is cautiously proceeding with investing in its network, despite the unpredictability of CRAN’s surprise decisions in awarding spectrum, and is placing all efforts to apply different interpretations, which are in contrast with the worldwide standards accepted by Regulatory jurisdictions from Asia to the United States, and including Europe.

MTC remains, without reservation, supportive of customer SIM registrations, and for that will mitigate the dampening effect it holds on customer growth, as well as number portability, (although we believe that this will not change the conditions of the market), while also retaining our position that the mobile termination rates are to be reduced more than the current N$0.20.

STRATEGIC POSTURING

As referred to in the past, looking ahead with ‘open ecosystems’, we will strengthen MTC’s three pillars for the future, namely: significantly increasing internet accessibility speed; continuing the business model of post and prepaid integrated packages; and continuing to build by focusing on customer experience in terms of data usage.

This last pillar of the ‘customer experience’ is part of a deeply analysis that ended in a plan that are current in course to uplift the current customers’ experience of internet accessibility today, to a predefined levels of experience download speeds in the 3G and 4G network, and that will be concluded by the end of December 2017. This is an internal position that the Board of Directors have committed their biggest-ever investment towards, in order for our network to be able to deliver these critical objectives.