We spoke to André Brink, National Manager: Facilities, Implementation and Support, and Johan Lubbe, Manager: Corporate Property.
Property is not your core business. Why do you feel that belonging to SAPOA could be helpful to MTN?
We agree that we are not a large player in the property field, however, let us start, by explaining that the MTN Group consists of MTN SA, MTN Service Provider and MTN International. When we speak about MTN’s property interests we will be referring exclusively to the first two members of the MTN Group.
Admittedly, property might not be a core business but if you consider that we administrate approximately 5 400 base station leases throughout South Africa (that is some 325 000m2 surface area), about 80 000m2 in office accommodation, 5000m² in retail space and some 10 200m2 in warehousing space in various urban centres, you could claim that our interests in property are hardly insubstantial.
To these, you need to add some 5 000m² in warehousing space and some 22 large and small switching stations that MTN own directly across the country. By any measurement this is a large property portfolio and we can assure you that without the proper management of this portfolio our core business would suffer.
Would it not be possible for you to outsource the management of this portfolio?
No! Our property activities must support the development – or roll out, if you like – of our core business. As you will realise, this core business has an explosive growth record – and a similarly explosive potential for future growth. The demands this growth has and will make on MTN’s needs for accommodation - and MTN’s property requirements in general - call for a very direct, very specific and flexible approach to property. The degree of flexibility that is essential to cater for this industry dynamism needs to be overseen and driven directly by the prime movers – those that develop our technology and those that are responsible for MTN’s marketing.
An outsourcing operation could never perform the strategic planning that is essential – and sometimes this strategic planning is either short term or requires frequent modification, with all the ramifications these inevitably hold for the business as a whole – upstream and downstream – and of course on our property needs. Also, we require careful assignment management, highly specific site selection, project management and build-to-suit development in our property area. This clearly calls for strategic financial solutions and custom developed portfolio management systems. We need to do these on a direct control continuum.
Furthermore, the constantly changing needs of our business, on the one hand, and, on the other hand, MTN’s commercial office / retail space requirements need to be brought – as far as it is possible to do so – into synch. A dichotomous situation – a dynamic core business placing ever changing demands on a traditionally slow moving property portfolio. We need to acquire additional expertise in the property arena to handle the exigencies that arise in times when the two businesses are out of synch.
For example, when we commenced with centralising some of our various core-related businesses together at MTN Innovation Centre in Fairland, some 40 000m2 of MTN commercial accommodation space became vacant in Sandton – virtually at once. Clearly we had to manage exit strategies in order to mitigate costs and expenses. The only way, in view of the leases we had entered into, was to negotiate termination agreements with the landlords, and alternatively fill excess space with sub tenants. As you can imagine, in this time of office oversupply this was no easy task.
And you see your membership of SAPOA as a means of enhancing your in-house property portfolio management/administration abilities…?
We look forward to availing ourselves of unparalleled opportunities to network through SAPOA among the leading property owners and investors, managers and administrators in the property industry. To MTN, SAPOA provides a kind of “hot rolodex” of all the key players in the industry nationwide, any of whom we can call on for guidance, advice, ideas – or even for just a round of golf! We also feel comfortable that SAPOA’S ability to provide its members (thanks to its sound networking relationships with the authorities) with the latest and best intelligence at national and provincial levels on legislative and regulatory issues affecting the commercial property industry is particularly valuable to us.
As we mentioned earlier we are not property developers in the true sense (for instance, Rand Merchant Bank and ABSA are respectively the landlords of MTN Innovation Centre phases I and II.), though as far as our technical sites and certain of our warehousing properties are concerned, MTN owns these properties. Where we are the developers our involvements stretch across the whole spectrum – from site-finding, acquisition, permitting or zoning, design, implementation, project management, installation and commissioning of all the equipment – this all requires a high level of support from our in-house experts. Property maintenance and facilities management are two other vital elements in our property portfolio management responsibilities. Here, we feel that the combined expertise of SAPOA’S members could be a valuable source of help.