Thursday, Aug 18, 2011

(This story was originally published Wednesday.)

By Devon Maylie

Of DOW JONES NEWSWIRES

JOHANNESBURG (Dow Jones)--South African telecom company MTN Group Ltd. (MTN.JO) has put growth in Syria on the backburner due to the civil unrest in the country, Chief Executive Sifiso Dabengwa said Wednesday.

The company had been in the process of trying to convert a "build, operate, transfer" license it was awarded by the Syrian government in 2001 to a full license as a way of expanding further in the country, Dabengwa told Dow Jones Newswires in an interview.

He had hoped for the full license to be granted this year but that now looks unlikely. "It's no longer a priority for the government. Everything is on hold," he said.

Dabengwa said the company has had a few conversations with the government but the current political situation is preventing any changes to the telecoms infrastructure taking place.

MTN is one of only two telecom companies operating in Syria--sharing a combined subscriber base of about 10.2 million with Syriatel Mobile Telecom SA. Earlier in the year, Syria's telecommunication ministry had opened a tender for a third operator but this has been put on hold.

Analysts at Religare Capital Markets said MTN hasn't been able to push through price rises or introduce new technology in the country without the permission of Syriatel. A cousin of Syria's president previously held a 40% stake in Syriatel but has said he is divesting it, Religare said.

"With the unrest, the government hasn't given any indication how it will proceed with conversion," said Dabengwa, adding that the situation "keeps things as they are."

Dabengwa said MTN will continue to operate in Syria but capital expenditure will remain low and the market there is less competitive due to the dominance of Syriatel.

"If Syria had gone ahead with licensing a third operator, converted the license, then Syria could have evolved into a normal competitive market environment," he said. "It's not a priority right now."

Dabengwa said the company is looking for opportunities to grow in other countries such as Angola, Ethiopia, Iraq and Algeria. Nothing is imminent but growth would come via merger and acquisitions, he said.

-By Devon Maylie, Dow Jones Newswires; +27 11 783 7848; devon.maylie@dowjones.com

(END) Dow Jones Newswires

18-08-11 0405GMT