SENS Note - 14 July 2006
MTN adds $65m muscle to staging of 2010 World Cup
 
MTN adds $65m muscle to staging of 2010 World Cup
Lesley Stones

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Information Technology Editor

CELLPHONE company MTN has put its muscle behind SAÆs efforts to stage a successful 2010 World Cup tournament by pledging $65m in sponsorship.

Its commitment ù about R468m ù is large enough to make MTN one of the global sponsors, ranking alongside Coca-Cola and Visa. It also makes MTN the first-ever global sponsor from Africa.

ôThis is probably the most significant global event that will take place in Africa in the foreseeable future,ö said CEO Phuthuma Nhleko yesterday. ôThe event provides significant attractive opportunities for Africa to showcase its ability to host events of such magnitude.ö

The deal gives MTN the right to deliver video footage of the matches to cellphones in Africa and the Middle East.

MTN would not comment on whether the cash would come from its normal profit flow, whether it will affect its dividend policy, or how soon it would part with the money under the four-year deal. It was also unclear whether the sponsorship could pay for itself by increasing the traffic carried on its network.

In four yearsÆ time, watching television on a cellphone may finally be turning mainstream, while users are also likely to download text details of the matches or view short clips of the highlights.

When President Thabo Mbeki accepted ownership of the 2010 event in Berlin last week, he said the next world cup would be the first event of its magnitude where the world would be able to participate via their mobile handsets.

Although both MTN and MultiChoice streamed match reports and footage from the German games to cellphones, the number of subscribers was small and the technology too clunky to attract a mass audience.

MTN is already heavily committed on the financial front with its $5,5bn takeover of Investcom. That deal requires substantial extra investments to grow InvestcomÆs networks in 10 countries.

Heavy investments had already absorbed MTNÆs cash pile of R3,2bn and left a net debt of R1bn even before the Investcom deal was announced.

Taking over Investcom has given MTN a presence in countries with a combined population of 500- million. Clever marketing to capitalise on the regionÆs football fanaticism may help to increase its customer base in those countries ahead of the World Cup.

Fifa has already raised $3,1bn towards the 2010 event through sponsorship and broadcasting fees. First National Bank was the first local company to step forward as a sponsor with a pledge of $30m, making it a national supporter rather than a global player.