27 March 2013

Namibia: MTC Wary of Leo Threat

MTC MD Miguel Geraldes told The Economist Wednesday that despite his company's current dominance, Telecom Namibia's ownership of leo may result in MTC losing some of its mobile customers to its competitor.

Geraldes said of Telecom's take-over of leo: "You will always have opportunities and you will have challenges, threats, whatever you can call them. We know our advantage, we know exactly where we can do better and where we have our challenges. We understand that they (Telecom Namibia) have more infrastructure than us; they can deploy much more fiber than us so in that regard it is a challenge to us."

Another challenge, Geraldes picked out, is the 100% government ownership of Telecom. He said since the government is a large MTC customer, its acquisition of leo through Telecom Namibia brings uncertainty.

"We know that they are a 100% government company ... and one of the most important customers that we have is the government. We don't know what in the end will be the result of that because, although the government has an indirect 60% ownership of MTC, we are an independent company. I don't know if Telecom Namibia has different rules in terms of their relationship with the government, but we know that thing [government ownership of leo] can affect us," the MTC boss said.

Telecom recently acquired debt-ridden leo's assets for a nominal fee of N$2 which, according to figures presented by MTC Wednesday, controls a 26% market share of the local mobile industry.

Despite the low market share, leo Acting CEO, Theo Klein told The Economist recently at the unveiling of the mobile operator's US$46 million network extension plans that he is confident of turning around the fortunes of the company. He said the company was targeting a 35% to 45% market share in the next five years. "It is going to take some time, but we are quite confident that we will turn the company around. We are going to capture a sizeable market share that will not only make leo profitable but the whole group," said Klein.

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