Tuesday, March 24, 2015

Dumsor costs MTN Gh¢25m extra in 2014

MTN Ghana spent more than GHC86 million on fuel and power in 2014 - GHC25 million out of that money was not budgeted for but had to be spent because of frequent power outages.

The company had budgeted over GHC51 million for its power and fuel needs for the year. But the severity of the power crisis, popularly known as dumsor, compelled them to spend that whopping extra GHC25 million to keep the network running efficiently.

This is contained in the company's annual report presented by MTN Ghana CEO Serame Taukobong at a stakeholders’ forum in Accra.

The breakdown as contained in the presentation was this; the market leader had budgeted GHC25.6 million for fuel for the year, but spent over GHC35million, indicating an extra GHC9million plus.

They also budget some GHC35 million plus for electricity but spent more than GHC51 million on power due to dumsor.

Serame Taukobong specifically blamed it on increased generator runtime due to high load shedding from August 2014 to December 2014, increased generator replacement (more than 350 in 2014) and the fact that its fuel load more than doubled to over 2million liters per month compared to that of 2013.

"We have over 3000 cell sites serving almost 14 million customers and all of them need to keep running 24/7 even where there is power outage and or battery theft and that comes at a huge cost," he said.

Meanwhile, during the year, the company experienced a considerable amount of battery theft, rising from 288 battery thefts in January 2014 alone to a whopping 562 thefts in  June 2014, before falling drastically to 24 in December 2014, due of effective and costly security measures.

MTN also saw some of the age-old fibre cuts on its network during the year, but in the midst of all those challenges, the company passed all of the regulator's quality of service tests at all locations all year round.

But the rising cost of operations, particularly due to the dumsor and fibre cuts compelled the market leader to cut down on promotions and activities that could excite its customers and stakeholders.

Taukobong said MTN is always committed to ensuring great customer experience at all cost and so it had to channel its available resources into ensuring that the customers got ten best of service on the MTN network.

"We believe service is the new selling and that comes at a great cost under the current circumstances but we remains committed to ten customer and delivered on our promise of a bold new world underpinned by a sustained great customer experience on our network," he said.

He said in the spirit of ensuring customers got great service, MTN invested heavily during the year in a number of infrastructural facilities to boost the performance of the network.

Corporate Services Executive of MTN, Cynthia Lumor told Adom News that the unprecedented depreciation of the Ghana cedis in 2014 resulted in additional cost for telcos because they buy every input in dollars.

She said even though MTN does not intend to increase tariffs because of the increasing cost of operations, if things continued the way they are "we have to do what we have to do."

In 2014 MTN installed over 400kilometers of fibre, connected over 500 cell sites to fibre, integrated 107 3G sites and 61 2G sites, installed 97 new 3G sites in the districts, two new Radio Network Controllers and two new Home Location Registers in Kumasi.

With respect to its commitment to customer service, MTN built two large Call Centres in Tema & Accra, introduced the Concept of Account Relationship Managers, commissioned new Flagship Data Stores, opened 82 Service Centres and 15 Volume Management outlets.

Again, in spite of the challenges, MTN paid more than GHC605 million in taxes to government in 2014. Meanwhile, its profit after tax for the year is just a little over GHC100million.

The company has earmarked GHC460million for investment in Ghana this year, mainly on network improvement and IT.

The telco said $85million is budgeted for Network improvement and $18 million for IT focus.

MTN remains Ghana's market leader on both the data and voice fronts. It increased subscriber by 7.1% in 2014 and currently commands over 45% of the voice subscribers and over 50% of the data market.

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