SOUTH AFRICA'S MTN SPENDS USD60-70M ON 3G LAUNCH
MTN, Africa‘s biggest mobile phone operator by sales, launched its third-generation network on Tuesday and said it hoped the service would snare half a million users within a year.
South Africa-based MTN said it had spent 400 million to 500million rand ($60.2-$75.3 million) on the initial launch but might invest up to 1.5 billion rand within 12 months if it persuades 500,000 customers to sign up for the new high-speed service.
"I think that is feasible within the next nine to 12months," Chief Technology and Information Officer Karel Pienaar told Reuters at a launch event. "The investment is subject to take-up."
Third-generation technology, which allows users to surf the Web on their phones, download music and films and make video calls, has been slow to catch on in Europe and other developed markets due to costly handsets and technical glitches.
MTN, which lagged its chief rival Vodacom by six months in the introduction of 3G, said it had chosen to wait until the technology and content was up to scratch and that it was not ata disadvantage. "If you had tried 3G earlier, you would probably have thrown it out," Ashraff Paruk, general manager of products and innovation for South Africa, told a news conference.
"We are confident we now have the product ... To take broadband to the masses."
Vodacom, majority owned by fixed-line phone firm Telkom and Vodafone, in December started selling the British giant‘s 3Gservices on its network, making it the first operator to offer the new technology in mainland Africa.
MTN customers will be able to access 3G services in the main urban areas of Johannesburg, Pretoria, Cape Town, Durban and Port Elizabeth, which Pienaar said accounted for 40 percent of the population.
The company hopes to extend the network to all towns within the next few years and to launch the service in Nigeria next year. Other African markets such as Uganda, Cameroon and Swaziland will probably follow.
"Third generation can really make a difference in Africa because Internet penetration is so low," Pienaar said.
MTN will charge the same for voice and data on 3G as for calls made on its standard GPRS network, which delivers data at slower speeds. It will offer free video calls for the first three months but after that will charge 2 rand a minute for contract customers and 3 rand a minute for pre-paid -- a slight premium on voice.
Vodacom has offered video calls at the same price as voice calls to attract customers and grab a hefty share of the market before MTN arrived.
MTN said its official target was to sign up 100,000 3Gcustomers within a year -- roughly in line with Vodacom‘s initial estimates -- but Pienaar said he hoped the company would chalk up at least 500,000.
MTN already operates an EDGE network in main urban areas in South Africa, which is a stop-gap technology that delivers data faster than GPRS but does not carry video calls.
The company plans to offer existing contract customers a free upgrade to 3G by supplying new SIM cards for their handsets, and top-end users will get a free 3G phone at their next upgrade.
"We are trying to make it as easy as possible," said Pienaar, who noted that without subsidies, handsets cost around4,000 rand ($602.3).