(formely M-Cell Limited) - Business Report 2003 - MTN Group

Strategic investments
IRENE CHARNLEY
Commercial Director
OVERVIEW
Strategic Investments is responsible for
cultivating new growth opportunities related to,
but outside of the core mobile business as well
as managing special strategic projects in the
Group. It currently oversees the Group’s
investments in Orbicom, MTN Network Solutions
and Airborn.
ORBICOM
Orbicom’s core business is satellite signal
distribution. It operates the largest commercial
satellite broadcast network on the African
continent. The company has experienced a
difficult year, with margins coming under
pressure in a highly competitive market.
Orbicom’s successful penetration of markets in
Africa resulted in up to 50% of its revenue being
US dollar-based. The recent strengthening of the
rand resulted in reduced revenues when
translated into rand. Earnings were also affected
by the unexpectedly late start-up of the
operation in Ghana, coupled with lower than
expected monthly revenue and the delayed
start-up of another major income-generating
project.
Some of the challenges presented by the
Ghanaian operation were partly addressed by
the deployment of a number of the company’s
technical experts to assist in stabilising the
Ghanaian network and switch. This enabled
commercial operation to commence in
June 2002.
During 2004, the company will focus on
completing the digitisation process in its
broadcast business. It will also allocate
considerable resources to the building of the
MTN Nigeria satellite earth station. It has
submitted a number of tenders for various
broadcast and telecommunications-related
projects in Africa. Another major project is the
construction of a satellite earth station in
Cape Town for the parliamentary uplink for
MultiChoice.
The company plays an important role in the
telecommunications sector as a convergence
provider, offering services that include broadcast
signal distribution, VSAT, microwave and IP
solutions. Its core business, however, is to
provide satellite solutions for clients such
as MultiChoice and Global Access SA and to
utilise its technology to offer business solutions,
especially in the rest of Africa.
Orbicom has plans in place to maximise margins
and has identified several potential new
customers. Its state-of-the-art infrastructure,
strong skills base and extensive experience in
Africa positions it well to provide broadcast
signal distribution services, VSAT and IP solutions
in new markets. In the short to medium term the
company plans to build at least four satellite
earth stations for broadcast and/or
telecommunications clients.
MTN NETWORK SOLUTIONS
The MTN Group has a 60% equity stake in MTN
Network Solutions, which provides managed
internet, VPN and hosting services for the
corporate market. It is South Africa’s fourthlargest
tier-one Internet Service Provider and its
operations generally offer exceptional
opportunities for convergence with MTN
South Africa’s mobile products and services.
The company achieved improved sales in a
difficult market during the second half of the
year and was able to achieve its targets in terms
of annuity revenue and EBITDA. It reached
break-even for the financial year and
successfully completed the roll-out of its core
national network and construction of a new
commercial hosting facility based in Rosebank,
Johannesburg.
AIRBORN
Defining and building a sustainable and
long-term culture of innovation is a critical
component in the provision of relevant and
innovative next generation mobile services and
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MTN BUSINESS REPORT 2003