MTN banks on mobile money

THABISO MOCHIKO

MTN’s mobile money service has the potential to contribute 15% of MTN SA’s total revenues in the long term, the company said last week.

In June MTN partnered with Pick n Pay, Boxer stores and Visa to re-launch mobile money service that will enable customers to transfer and receiving money, and also pay bills. Mobile money is one of the key areas of focus for MTN Group as it focuses on growing data-driven services.

MTN’s total mobile money subscribers increased by more than 20% in the quarter to September, to 22.2-million, or about 10% of the total number of subscribers.

MTN SA CEO Ahmad Farroukh said the take-up of the service was still slow but it would contribute significantly in the future.

"It will be nice to get 15% of total revenues from mobile money."

MTN SA chief marketing officer Larry Annetts said from next month the company would add more agents especially in townships as mobile money distribution channels. This will enable people in areas where Pick n Pay or Boxer are not in close proximity to receive and send cash.

Kagiso Asset Management investment analyst Aslam Dalvi said mobile money was most successful in markets with low formal banking penetration. With SA already having a "high level" of financial inclusion, "we would expect the opportunity for mobile money services to be smaller".

MTN SA reported an improved performance in quarter to September attracting 1.4-million to take its total subscriber base to 26.7-million. Combined average revenue per user for pre-paid and contract was down 4.6% to R89.26.

Data subscribers increased to 16.1-million, and data usage grew by 55.9% supported by attractive data promotions and improved network quality. Data now contributes 22.7% to MTN SA’s total revenue.

MTN SA had a rough trading period in recently — losing its market share. But its recent promotions have played a key role in helping the company to gain traction.

Kate Turner-Smith, an analyst at BPI Capital Africa, said while the performance was pleasing, it was not enough to make full year look great. The promotions that MTN has been doing in SA are not sustainable and the company needs to invest more in network and to ensure that it retains its customers through among other things mobile money, to keep customer loyalty.

Mr Dalvi said management’s strategy on improving value to customers through promotions and a clear focus on lowering costs was yielding results.

"While we would expect an improved SA performance from the current base, regulatory uncertainty and price competition remain significant headwinds for the business." he said. In order to remain competitive and deliver improved profits, management would need to focus on further improving its cost structures in SA, said Mr Dalvi.

MTN SA is slashing costs across the organisation. This has led to hundreds of job cuts.

Overall MTN Group grew its subscriber base by 2% to 219-million in the third quarter of the year.

Data increased by 34% and contributes 17.8% to total revenue.

MTN continues to benefit from good growth in non-voice revenue driven by data and mobile money across key markets, said MTN Group CEO Sifiso Dabengwa.

Mr Dalvi said data performance across the group, and especially in Iran post the conversion to a 3G licence, was strong and the growing from mobile money, "where we see good medium-term opportunity, were highlights of the results".

SOURCE:BUSINESSDAYLIVE.