Telecom Namibia Eyes Billion Dollar Growth

Mergers, Acquisitions and Financial Results

Telecom Namibia (TN) has an ambitious plan to achieve N$1.35 billion in revenue by 2010. According to the latest report of the Telecom Industry Association (TIA), the worldwide revenue growth in the global telecom industry is expected to hit $3 trillion (N$22.5 trillion) in sales by 2010. It is expected to surpass $2.5 trillion (N$18.8 trillion) in 2008, the report adds.

Telecom Managing Director Frans Ndoroma said the company should show a fair return despite all challenges. To achieve the N$1.35 billion target, Telecom Namibia needs to cut its operating costs (to preserve margins), reduce churn to minimise loss of revenue, seek opportunities to increase APRU (average revenue per user) for existing customers, acquire new customers and identify new revenue opportunities from the traditional streams, he said.

At the same time, the company wants to emerge as a fundamentally strong ICT service provider through its extensive investment in next generation network (NGN) infrastructure.

Speaking in Windhoek last Friday at the Telecom Namibia Budget Kick Off meeting, Ndoroma said the country's telecommunications giant, which is looking forward to a speedy all-round growth with special thrust on NGN products and services, has targets to phase out most of its legacy systems and to grow revenue by 27.4 percent within the next three years from the N$1.06 billion recorded in the 2006-2007 financial year. "We have embraced the target of N$1.35 billion for 2010," Ndoroma said.

Currently, fixed voice remains Telecom Namibia's cash cow, but the company is innovating and changing to accommodate evolving technologies and the shifting competitive landscape. Ndoroma said to achieve the revenue target, the main thrust is increased spending on public network equipment and higher spending on new services and products in support of enterprise and public network equipment.

Priority is being given to broadband technologies such as ADSL, WiMAX, CDMA and Metro Ethernet as well as the rollout of the state-of-the-art IP/MPLS transport network. The deployment of the latter has reached an advanced stage this month with the countrywide migration of ADSL and Infinitum services onto this network.

It is predicted that a continued growth in broadband and wireless services will fuel an increase in wireless subscribership and increased average revenue per user from content (entertainment) and other non-voice wireless applications within the next three years.

According to Ndoroma, the company is determined to build itself organically as a fundamentally strong and growth-oriented ICT service provider as per its strategic roadmap towards 2010.

"The six months to date for the 2007-2008 financial year clearly indicate the potential and extent to which we can bring our multitude of products and services to our customers (present and future) and thereby meaningfully increasing out turnover," he said.

He said this would not only go a long way in helping the company to start to gradually rebuild its cash reserves beyond 2010, but also encourage better performance in the coming days with higher motivation.

He revealed that Telecom Namibia has seen heavy investments amounting to N$489 million for the year ending September 30 last year.

Ndoroma said Telecom Namibia has invested N$346 million in re-engineering the country's network in 2007 to be at the forefront of technological advances. However, the company expects this investment cycle to plateau in 2009 and decrease after 2010.

"Now the sowing has been done, the implements have been bought, the network has been cropped up, it's time to harvest and feed the market," he said, adding, "Just like any other expense item, we need to show a meaningful return on the investment."

Telecom Namibia has equity in two foreign ventures, namely Mundo Startel in Angola and CommuniTel, which forms part of Neotel, South Africa's second network operator.

Ndoroma said the abundant cash reserves of his company have been used to enhance the network grow the market potential and spread Telecom Namibia's wings within the SADC region.

"Both ventures indicate heavy investment and operating costs with little revenue to show ... [but] we understand the rationale of all these investments," he said. The investment in South Africa amounts toN$48 million and N$95 million in Angola.

Neotel, although still rolling out heavily in infrastructure, is showing strong revenue growth. In Angola, despite challenges that at times seem insurmountable, Mundo Startel is expected to launch its services in the third quarter of this year.

New Era