Africa's foremost cellular operator MTN will be spending close on R30-bn on its Nigerian operations after recording a fantastic year of expansion in Iran.

Bruce Whitfield:
Iran has come to the party for MTN. The company reporting solid results ahead of expectations, profits were up 17 percent, and the company saying it plans to add another third to its customer base which is already more than 60-million, the dividend up from 90 cents to R1.36, and a number of big issues to address with the chief executive Phuthuma Nhleko, who joins us now. Phuthuma, three years ago when you entered Iran, many people including myself were quite sceptical about the move, considering US foreign policy at the time but it is a strategy that does seem to be paying off, good evening.

Phuthuma Nhleko:
Yes, well I think we are fairly happy with the results. I mean, just to say that when we first went there, you know the problem with the US wasn't there in the form that it is today and secondly, that really the operation only kicked off in January 2007.

Bruce Whitfield:
Absolutely, and from that time 157 000 customers January last year to six-million by the end of last year, that is a considerable rollout. Is that the quickest rollout that you have had in your history?

Phuthuma Nhleko:
Absolutely, you know, we are now over 2000 base stations. I mean, it took South Africa, let's say, you know, 14 years to get to over 4000 base stations and in Iran we have done half of that in a year and we have done almost half the subscribers that South Africa has over 14 years in one year so it has been obviously the fastest rollout and growth we have had in the group so far.

Bruce Whitfield:
That must have led to some considerable technical and possibly teething challenges as well.

Phuthuma Nhleko:
Yes indeed, it did put a lot of pressure on us but I think I should also say that that was the first time that we followed a different model. It was essentially a turnkey arrangement where we split the country into three regions and went with certain vendors on a complete turnkey basis.

Bruce Whitfield:
Okay, so it was a novel way of approaching and perhaps something you would consider in new markets into the future. Something interesting you said in your opening remarks and that was about the political situation, the United States's view on Iran at the moment; are you concerned that the United States approach to Iran is something that could destabilise the venture there into the future?

Phuthuma Nhleko:
Look, we remain concerned you know, as these are things that we don't have any influence over, needless to mention, but as I said in 2004 when we bid for the licence the whole nuclear discussion had not commenced. Anyway, the fact of the matter is we are there now and we have got a business and we can only hope, that you know, we can ride out that storm.

Bruce Whitfield: Talking about another storm, Nigerians, they have made life more interesting for you as well, it is your biggest market at present, and your tax holiday there has come to an end and some analysts were expecting single digit profit growth from MTN as a result of that tax holiday coming to an end, you did deliver double-digit and healthy double-digit growth, the tax regime actually looks quite onerous in Nigeria - is it considerably more onerous than other territories in which you operate?

Phuthuma Nhleko:
Well, not really and I think, in fairness to the Nigerians, you know they have just simply stuck to the rules and the rules were, you know we will give you a five-year tax holiday and at the end of that five-year tax holiday, which is March 2007, we then got a complicated formula which really makes the tax rate very high for the first sort of 18 months.

Bruce Whitfield:
And that is around 40 percent.

Phuthuma Nhleko:
That’s right but that comes down towards the end of next year so it is just a queerness or oddity of the formula thereafter you know we should be down to the tax rate of around 30 percent. So nothing unexpected but, as you indicated the growth that we have had in Nigeria and elsewhere has more than compensated for that.

Bruce Whitfield:
Absolutely, but also their regulators have slapped a fine on you for poor service that must have been, I guess somewhat disappointing, and have you taken remedial action to prevent those things being imposed in future? Phuthuma Nhleko:
Well look, I think it was as a result of high congestion but as you know the court ruled in our favour yesterday, to say that proper due process was not followed and that was not the way to deal with it.

Bruce Whitfield:
Okay, I wasn't aware of that.

Phuthuma Nhleko:
So we remain very confident that we will find an amicable settlement on that and of course as you know we have got huge capex coming in this year to try and reduce that congestion.

Bruce Whitfield:
What sort of capex are you looking at for 2008, for the current financial year?

Phuthuma Nhleko:
Well on a group wide basis we have given the number of R30-billion but that 30-billion I must say, you know, will be tested from time to time depending on what that traffic growth is. It will also include you know commitments towards the end of the year which will most probably be for equipment for 2009 even though the commitments will be made in 2008. Having said all of that we have got absolutely phenomenal growth and huge traffic that we really do have to cater for and the example that I gave this morning is that to use Iran as an example; by the end of December 2008 we have projected another seven-million subscribers so it will be a 14-million subscriber market in two years which is just as big as South Africa and to cater for that you have got to invest and that is really where we are.

Bruce Whitfield:
How much investment in South Africa? A lot of people complain about the South African infrastructure not being as comprehensive as it could be - are you finding that you are needing to reinvest here quite a lot?

Phuthuma Nhleko:
No absolutely 2008 is a big year for all the large and key operations including South Africa. In South Africa you know we are having a very big rollout to improve quality and congestion in the high-density areas as well so that will be fairly significant and you will be looking at about seven-billion rand.

Bruce Whitfield:
Extraordinary story, the MTN story, Phuthuma Nhleko thank you very much indeed, chief executive officer of MTN.