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MTN Group Strategic Analysis

Article · July 2020

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Seyed Pouria Mousavizadeh Tehrani Shiva Foroutan

Eghtesad Bidar Broker University of Tehran
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MTN GROUP STRATEGIC ANALYSIS 1

MTN Group Strategic Analysis

Shiva Foroutan, Seyed Pouria Mousavizadeh Tehrani
July 28, 2020
Introduction
There are few leaders in the telecommunications services industry and one of them is MTN Group. MTN
with a 4.8 Billion Dollar market cap has over 18 thousand employees [1]. They have started from South America
and are now operating on 21 countries. They offer broadband, Internet products and services and also converged
fixed or mobile products and services [2]. In order to accomplish their vision “To lead the delivery of a bold, new
digital world to customers”, they need to be agile to overcome the challenges of the technology industry
fluctuations [3]. In order to go through this, they have launched LTE network as the first provider in Zambia and
Uganda [4]. So why are they operating in multiple countries? What is their internationalization strategy? Who are
the stakeholders to this organization?

Dynamic Strategy
We can observe that the telecommunications industry has experienced the most changes comparing to
any other fields in business today [5]. This industry is mature enough to make the firms feel the pressure to upgrade
and roll out their networks due to the market changes. According to the Bain & Company, The best way to create
value in telecommunications companies is to use the M&A strategy and scale deals [6].

MTN also uses the M&A strategy to take the opportunity of scaling by proposing a $23-billion deal
between Bharti Airtel and MTN Group [7]. They have expanded their business plan to the OTT services and have
aggressively outgrown the competition [8] and now, in order to overcome the Vodacom Group, MTN Group has
launched its 5G commercial network in South Africa [9]. MTN has reach the shakeout phase in Competitive Life
Cycle model and created a duopoly in Iran with MCI and dominated the market share [10]. For additional
information look at Exhibit 1.
MTN GROUP STRATEGIC ANALYSIS 2

Internationalization Strategy
MTN has begun its international expansion since 1997. It has acquired the licenses of three countries of
Uganda, Rwanda and Swaziland from 1997 to 1999. The company’s geographical reach was up to 3 continents,
Africa, Middle East and parts of Europe and has now continued to expand its territory to 21 countries [11]. There
are some key factors that motivate a firm in the telecommunications industry to use internationalization strategies.
For example, being the first mover in a country will be a big advantage for the firms. Another factor is economic
gains, telecoms such as MTN Group has a big network and can take the advantage of economies of scale [12]. To
find the position of MTN Group in Internationalization strategy model, we should look at the levels of global
integration and local responsiveness of its products and services. As we mentioned earlier, telecoms have the
advantage of economy of scale when it comes to global integration. There are several factors for local
responsiveness in telecommunication industry. Telecoms need to changes the language of their services to local
language, they also may create local contents for specific countries. Telecoms need to change the frequencies
based on local regulation policies, they also need to hire local employees and experts. However, the network
infrastructure remains the same. They do not need to change their overall service design to meet the local
expectations. MTN Group has followed the ITU standards in each country and made integrated and large networks
[13]. For more information, look at Exhibit 2.

Diversification Strategy
To increase the competitiveness of the MTN Group, as you can see in the picture below, one of their
three pillars is diversification. they use this strategy to beat the competition [14].

According to the MTN integrated report for the year 2018, one of the leading goals to diversify the firm’s range
of service provision is to improve the global connect operating models. In order to prevent the telecom companies’
traditional way of earning money from running dry, the firms need to diversify their services or add new
complementary products to their portfolios. In order to go on with this goal, MTN has aimed to improve its non-
voice revenue and since Africa, one of the firm’s biggest customers, is increasing its focus on fintech and digital
services over its networks, MTN has announced a partnership with Africa- based financial service groups to sell
MTN GROUP STRATEGIC ANALYSIS 3

high-end insurance products through digital-only channels. It can be conceived that in order to expand the firm’s
profit, it mainly focuses on the new emerging demands in its big leading customer companies and goes through a
partnership with them. This way the risks are mitigated and divided between the two companies and they both
benefit from the new product that is added to the firms’ portfolios.

Stakeholder Analysis
MTN stakeholders consist of entities or individuals that are either directly or indirectly impacted by
MTN’s operational activities, or can influence the Group’s ability to successfully implement its strategies. There
are several reports that have identified MTN stakeholders [15]. In our research the key stakeholders are as follows
[16]:
• Employees
• Investors
• Regulators
• Government officials
• Suppliers
According to their report on 2013, these are the stakeholder’s issues, expectations and MTN management
approach.
Stakeholder Requirements
Investment community • Sustainable shareholder
returns
• Consistent disclosure of
operational and financial
performance
• Clarity on MTN’s strategy
• Sound governance practices
Customers • Provision of relevant voice,
data and ICT services
• Contribution to socio-
economic environment
• Good customer service
• Value for money
People and Trade unions • Competitive pay and
compensation benefits
• Development opportunities
• Working for a market
leader
• Investment in communities
• Fair labour practices
• Individual customers (street customers)
• Corporate customers
• Community groups
• Media
Issues and concerns
• Governance and ethics
• Capital allocation and
shareholder returns
• Medium- to long-term
growth strategy
• Improved performance in
South Africa
• Regulations (termination
rates, spectrum)
• Repatriation of cash from
operations
• Sanctions
• Network capacity and
quality
• Service quality
• Affordability
• Competitive offerings
• Innovative and relevant
digital solutions
• Aligning skills to the
evolving business model
• Remuneration
• Skills shortages
• Best practice sharing and
standardisation
• A consistent organisational
culture
• Employee safety in volatile
markets
Management approach
• Improve investor
knowledge of the Group
• Maintain sustainable
shareholder returns
• Support access to the board
and management
• Ensure transparent reporting
• Continuous improvement in
service delivery which
includes simplification of
processes and training
• Increase self-service
options, which improve ease
of accessibility
• Enhanced CRM systems
• Focus on digital and ICT
services
• Market segmentation
• Relevant and competitive
offerings
• Training, skills development
and talent management
• Investment in graduate
programmes
• Ongoing alignment of skills
to operational structures
• Internal communication
forums
• Regular engagement to
understand issues and
MTN GROUP STRATEGIC ANALYSIS
Governments and regulators • Compliance with licence
conditions
• Managing market dynamics
• Engaging with agencies,
departments and
government officials
responsible for creating and
enforcing government
policy and directives
• Universal service
obligations
• Good corporate citizenship
Industry bodies • Seek consensus and input
on industry issues,
standards and practices
• Best practice sharing
• Drive a common agenda
through dialogue
Media • Keeping stakeholders
informed of MTN’s
strategy, performance and
developments
• Transparency
Suppliers and Business • Helping to facilitate MTN’s
partners ability to do business
• Transparent procurement
process and procedures
• Participating in evolving
ICT offerings
Local communities • Sustainable market place
• Social upliftment
• Closing the digital divide
• Group reputation
• Retrenchment and cost
optimisation
• Complexity of different
labour jurisdictions across
MTN’s markets
• Engaging organised labour
on change and
transformation
• Cost to communicate
• Frequency availability
• Spectrum allocation
• Rural population coverage
• Market dominance
• National priorities
• Local ownership
• Quality of service
• Infrastructure sharing
• Environment and
communities
• Ensuring the appropriate
level of representation and
active participation
• Compliance with a
growing number of
protocols
• Prioritising affiliation to
numerous industry bodies
• Lack of wide media
understanding of MTN and
ICT industry
• Access to management and
strategic information
• Coordination between
Group and operations
• Complex supply and
demand requirements
across MTN’s business
• Payment terms
• Deadlines
• Appropriate revenue share
• Growing needs of
communities
• Good corporate citizenship
• Giving back
• Employment
4
concerns and explain
MTN’s approach to
achieving a sustainable
market place
• Managing expectations
through regular internal
updates on key projects
• Constructive relationships
with trade unions
• Aligning expectations to
MTN’s sustainable business
model
• Increased engagement with
decision makers
• Minimise litigation
• Improved internal regular
coordination across the
Group
• Infrastructure sharing
• Ensuring the appropriate
level of representation and
active participation
• Compliance with a growing
number of protocols
• Prioritising affiliation to
numerous industry bodies
• Improving media’s
understanding of MTN’s
business and operating
environment through
workshops, site visits and
management engagement
• Increased engagement with
MTN’s leaders
• Centralisation of
procurement
• Leveraging best practice
across the Group
• Ensuring strategic and
constructive relationships
• Partnership approach
• Aligning supplier
relationships to MTN’s
values and service culture
• Focus on CSI
• Roll out education
initiatives to more MTN
markets
• Focus on relationships with
NGOs and service providers
• Generate more media and
stakeholder exposure to
MTN’s CSI initiatives
• Integration of projects
across the Group
• Ensure scalability of
projects
• Relevant sponsorships
MTN GROUP STRATEGIC ANALYSIS 5

Conclusion
In this strategic analysis report we’ve tried to give a comprehensive sight of the strategic path of MTN
Group, one of the biggest companies in telecommunications industry. First, we started by giving a brief
introduction of their geographical scope and then we took a look at their products, including broadband, Internet
products and services, converged fixed or mobile products and OTT. Second, we discussed how the M&A strategy
has evolved through the years in the telecommunications area and how it’s necessary for the firms to go on with
this strategy if they tend to compete more reasonably in the market and turn to the leading company in the telecom
industry. Due to the fact that economy of scale has a great impact on telecom industry corporations’ functionality,
It is only essential for the firms to try and expand their scope of work and therefore take the most out of the
potential market share. In order to increase the competitiveness of the MTN group, as we mentioned earlier, the
best strategy is to diversify the set of products or services which will also be enhanced as the firms go further and
further in the internationalization strategy paths. In the last section we’ve mentioned some key stakeholders to the
MTN group and noted the fact that in order to be more successful in the competing environment of
telecommunications firms, one should prepare itself to take appropriate managerial approaches as different issues
come along. This would be much easier if the firms have the perception of their stakeholders requirements and
try to investigate their issues.
MTN GROUP STRATEGIC ANALYSIS 6

Exhibit 1 – The Competitive Life Cycle

Mature Emergent
Phase Phase

Growth
Phase

Exhibit 2 – Internationalization Strategy

International Strategy
Global Integration

Local Responsiveness

MTN Group
 MTN GROUP STRATEGIC ANALYSIS 7

References
1. Forbes, MTN Group https://www.forbes.com/companies/mtn-group
2. IDE-JETRO, MTN, https://www.ide.go.jp/English/Data/Africa_file/Company/swaziland03.html
3. MTN Group, Annual Sustainability Report for the year ended 31 December 2016
4. Capacity Media, MTN Zambia launches country’s first 4G network
5. Duke Corporate Education, How the MTN Group is grappling with uncertainty
6. Bain & Company, The New Age of Scale, Scope and Infrastructure in Telecom M&A
7. The Economic Times – The India Times, Bharti-MTN deal biggest M&A activity in India's history
8. Telecoms.com, MTN unveils its first OTT service and roadmap for digital fortunes
9. Intelligent CIO, MTN South Africa launches 5G, 6 July, 2020
10. HIS Markit, Iran to License Third Nationwide Cellular Operator
11. MTN Group, Who We Are – History, https://www.mtn.com/who-we-are/history/
12. Strategic Differentiation of Internationalization in the Mobile Telecommunications Industry: Case
Studies, by Whan-Seon Kim, Myeongho Lee, and Kyung-Don Kim
13. MTN Group, MTN’s Global Presence Results in Meaningful Connections
14. MTN Investor, Group president and CEO’s report
15. MTN Group, Sustainability Report 2014
16. MTN Investor, Stakeholder engagement

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