Mobile operator MTN is in a defiant but focused mood. News last week that the company had forfeited its seven-year dominance in Africa to rival Vodacom has been met with a sense of urgency to recapture lost ground.

Media reports point to a difference in market capitalisation between the competitors. As of Wednesday 11 May, MTN's stood at R244-billion, while Vodacom was at R249-billion.

MTN's shares have also declined by 31% since October 2015, and according to annual results for 2015, the company experienced a 51.4% decline in basic headline earnings per share.

COO Jyoti Desai told ITWeb Africa that the US$5,2-billion (now US$3,9-billion) fine issued by the Nigerian Communications Commission (NCC) caused colossal damage, along with the subsequent withdrawal of services in that region.

"I think if you look at the quantum of the fine, it's just ginormous by any standard... I don't think anyone in the market can digest the number that has been put forward, so it's bound to do some damage to the share price. When one looks at the fact that many of the subscribers who are not properly registered don't even contribute that much in one year of outpour... a thousand dollars, you know, it does have a significantly damaging effect because we have a wide expanse of customers in Nigeria... we are inclusive in terms of all sectors of the economy," said Desai.

The registration compliance process and disconnection of 4,5 million subscribers in February in Nigeria has been keenly felt.

In that time MTN Nigeria's operation suffered a loss of 2.61 million internet subscribers, and, according to its financial results for the period ending 31 March 2016, a 6,9% reduction in mobile subscribers.

Desai says given the size of the company's operation, its profile and the level of visibility it has established, it is not surprising that the fine would have a significant impact.

She also makes it clear that the imposition of the fine was not because of unwillingness to comply with regulation. "In fact we were collaborating with the regulator at all stages of the process, it's unfortunate they had one interpretation of what the engagement was and felt that they had given an instruction that we didn't follow, when we had had deeper engagement with them."

Regulation needs work

Desai advocates collaboration between sectors to create and establish a national database system, which would address subscriber registration disconnect.

"Having a process where the industry works together...so the government has the data they need, we're not at risk all the time, the banks are not at risk all the time. You can't have a business that is 'stop-start' 'stop-start' , the cost of doing business in Nigeria is very high. So, all stakeholders working together to create a system of national identification that is usable across the industry I think is very key to the future. Cause otherwise the exercises we do are all still isolated databases."

This level of collaboration will reinforce liaison between the regulator and operators within the telecommunications space, according to Desai.

She is believes there is a European influence which has crept into the way companies are managed by regulators when entering the market. "I am not going to challenge the regulators motives in doing that, but I think sometimes one needs to understand that the cost of a telecoms company to go into any of these markets in Africa is probably two-to-three times what happens in Europe."

Despite the difficulty within Nigeria and the ongoing intense negotiation process to resolve the impasse with authorities over the fine, Desai dismisses any talk of MTN exiting the West African nation and says the company has invested too substantially in the country's infrastructure and economy to even consider pulling out. "The environment would have to get a lot more difficult before we did that."

Plans for Africa

MTN has a two-pronged plan to bolster operations in Africa, support its presence and leverage adoption of rich media, innovation, mobile money, digital transformation and basic VAS & digital services.

The plan is to manage cost, as well as grow revenue through the diversification of its current services portfolio, and emerge as a digital lifestyle partner to customers rather than serving as a voice and data company.

The rationale behind this diversification is to meet the needs of Africa's evolving ICT and telecommunications market, but also to balance its strategic investment against the regulatory environments in regions across the continent.

"We have made very good progress in improving our digital portfolio. But the revenue challenges won't go away... the one concern that I have always had for the last couple of years in Africa, is that the price at which tariffs have eroded, especially in the data space, has been much faster than the pace at which we are required to make an investment in growing that business. In other words the data infrastructure requires more and more capex, but the effective rate you get per megabyte constantly goes down."

And in a market that MTN has long seen as ripe for consolidation and partnerships, the company will only consider alliances that add value to its ambition to up its game and be more competitive.

"Consolidation will make sense where there is an incremental value that we are getting from that acquisition. We won't just acquire for the sake of becoming a bigger player in that market. Whether it's a small market or big market, MTN has always invested well ahead of time in those markets. We accept we have to up the game to be more competitive in an ongoing basis and it is in our interest to have competition in these markets," says Desai.

For now, the company is aware that negotiations with Nigeria's authorities continue, and that any chance of recapturing market share will depend heavily on skills transformation, talent recruitment and a positive reaction from end-users to offerings, promotions and new solutions.