South Africa’s MTN to boost investment in generators to combat blackouts
Telecoms group joins growing list of companies plugging shortfalls from state electricity provider
Africa’s biggest mobile phone group MTN is to invest R1.9bn ($101mn) by the middle of the year in generators, batteries and renewable energy to cushion it against rolling power blackouts, which it fears could continue for another three years in its home market of South Africa.
The sum to tackle the energy emergency adds to the R2.6bn the Johannesburg-listed company has spent on generators amid a “crisis” of vandalism at mobile phone towers and base stations, chief executive Ralph Mupita told the Financial Times. It also invested R10.1bn in regular capital expenditure in South Africa last year.
Near-daily power outages, known locally as load shedding, have weighed on the continent’s most industrialised economy and left businesses dealing with vandalism and theft on back-up power investments. MTN has also increased security through measures such as encasing batteries in concrete bunkers.
“As we look at our business in South Africa, the key thing is to get beyond the load shedding,” Mupita said in an interview at the group’s headquarters. “Our view is that load shedding will be with us for at least another three years, which is why we’ve pre-emptively invested in the resilience of our network.”
Ahead of pivotal elections in May, the government says the power cuts — which occurred on a record 280 days last year — will be over by the end of the year.
MTN joins a growing list of companies plugging shortfalls from the state electricity provider Eskom. The private sector now generates 10.4 gigawatts of electricity, close to half of Eskom’s functioning capacity, the Minerals Council estimates. Some analysts believe private generation could exceed the output from Eskom’s ageing coal-fired fleet as early as 2025.
“If load shedding improves, then we have the opportunity to actually sell some of the excess power back into the grid. It’s an opportunity that could come out of this crisis,” Mupita said.
MTN has been focusing heavily on digital payments as part of an expansion of its fintech arm, where transactions increased by 32.2 per cent last year.
The number of active subscribers to its mobile money service grew to 72.5mn as the company finalised a deal with Mastercard that valued the fintech arm at $5.2bn. Mupita said the group was seeking a new round of minority investment into the business.
MTN this month reported a 79 per cent drop in net income to R4.09bn as a currency devaluation in Nigeria weighed on profits.
The company is working to move a greater share of its dollar-indexed costs, including in mobile phone towers, support agreements and equipment imports, into local currency so they can be “sustainable on a long-term basis”, MTN Nigeria chief executive Karl Toriola told the FT.
“It is a challenging market time, but Nigeria has a tendency to come back from the precipice. It is still the most populous country in Africa — youthful, growing, very rapidly seeing internet penetration. Anyone who is there when the tide turns will see upsides,” he added.
This article and image originally appeared on the Financial Times