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Convergence is the buzz word in Jo'burg - Profile

CommunicationsWeek International, Feb 18, 2002 by Lance Harris

Paul Edwards, who started his life as an educator but made his name in broadcast media, is moving South Africa's M-Cell in the direction he knows best: into the world of content.

Ten years of working in the broadcast media industry has given Paul Edwards, chief executive of South African telecoms group M-cell, a clear picture of the importance of content to telecoms services in the future.

"Bandwidth is a utility and the differentiation will become what you offer with your pipe," says Edwards. "The AOL and Time Warner merger...shows that the convergence of content and delivery as a model is starting to take off"

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His career has taken Edwards from banking to media and telecoms in Africa and Asia. If that has given him a broad view of providing services to consumers, the defining moment for Edwards was his appointment in the early 1990s to head up South Africa's first pay-TV service, Multi-choice and lead its expansion across Africa.

"My interest in convergence comes from the time I spent at Multichoice and at Hong Kong's Star TV," he says.

Edwards was recruited to launch Star TV's pay service in 1993. Part of the News corp. empire, Star TV today reaches more than 300 million people in 53 countries across Asia, India and the Middle East.

Edwards returned to South Africa in 1999 to take up the reins of Johnnic Holdings, at that time an investment trust with interests in areas as diverse as breweries, media, property and pharmaceuticals. Under Edwards' hand, Johnnic was reinvented as a holding company with controlling interests in media group Johnnic Communications and M-Cell.

A former colleague at Johnnic describes Zimbabweanborn Edwards as "a firm, performance-driven, yet patient leader"--qualities that would have been needed right from the early years of his working life as a physics teacher.

Edwards moved to M-Cell last August, in line with the holding company's desire to exert more direct control over its subsidiaries. It left him at the helm of the business that accounts for more than 90% of Johnnic's earnings.

M-Cell, through its subsidiaries MTN South Africa and MTN International, operates GSM networks in six countries: South Africa, Uganda, Nigeria, Rwanda, Cameroon and Swaziland. It also owns the South African corporate Internet service provider, Citec, and commercial satellite operator, Orbicom.

Edwards' strategy at M-Cell is to wrap "sticky" services around its connections. MTNSMS.com, M-Cell's web-based SMS portal, has some 7 million registered users and sends around 17 million messages a month.

According to Edwards, a Lord of the Rings SMS game starter pack harnessed the hype of the bigscreen movie, with 20,000 game packs moving through stores in December alone. "That brought together Johnnic's cinema and newspaper interests with our business. That's the sort of value that convergence can bring to a telecoms group," he says.

Behind mobile giant Voda.com, MTN South Africa is the country's second-largest cellular operator, with around 4 million subscribers.

But growth in South Africa has started to plateau, and the arrival of a third operator, Cell-C, last November could eat into the incumbents' market share. The South African operation is now focusing on growing its base in the lucrative and loyal subscriber market rather than "chasing numbers" in the price-competitive prepaid market.

"We don't want to be the cheapest provider but will rather position MTN South Africa as a value-added provider to corporate customers, as well as small to medium-sized businesses," says Edwards.

MTN South Africa has stabilized average revenues per user (ARPU) by focusing on high-end subscribers and rolling out data products for consumers and businesses, according to Edwards. He says GPRS is on track for a mid-year launch.

Meanwhile, MTN Cameroon has grown from 8,000 to more than 200,000 subscribers in less than 18 months. And Edwards hopes MIN Nigeria, which has acquired more than 100,000 subscribers in less than a year of business, will even tually grow to rival South Africa.

Nigeria, with 220 million people is the most populous country in Africa, but it has a teledensity of only 0.5%. Peak funding for MTN Nigeria, including the $275 rail lion M-Cell paid for the license, will reach around $900 million, making the network one of the biggest foreign investments in the country outside of the oil industry.

"ARPU at nearly double that of South Africa is higher than we ever would have imagined," says Edwards.

Johnnic and the South African government are still on the hunt for an international strategic equity partner to take the 20% stake in M-Cell held by state-owned transportation group, Transnet. Early this year, the government sold Transnet's stake in M-Cell to Ice Finance BV for $475 million, a passive investment company based in the Netherlands.

"We're not desperate for an international partner," says Edwards. "[But] forming the African component of a global network and sharing in a global player's research and development expertise s still very attractive to us."

Technology Industry

Convergence is the buzz word in Jo'burg - Profile

CommunicationsWeek International, Feb 18, 2002 by Lance Harris

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