The head of MTN’s financial services business in SA is looking to entice more users to the cellphone operator's mobile money platform by cutting out fees on the sale of digital goods such as airtime and electricity.
With declining voice revenue and data margins squeezed as a result of public pressure and regulations, mobile operators have been looking at other ways to generate revenue from their huge customer bases. For MTN, which has about 289-million subscribers across Africa and the Middle East, fintech is one of its areas of focus, driven by mobile payments.
In SA, mobile operators are the embodiment of the adage that telecom operators are trying to be more like banks, offering a set of products and services on their mobile payments apps that lenders have for a long time offered through their online channels.
In an interview with Business Day, Bradwin Roper, CEO of MTN SA’s financial services business, said South Africans, accustomed to paying fees every time they use a card or banking solution, are increasingly seeking alternatives to traditional financial services offerings.
With hard-pressed consumers looking for the best deal, MTN is hoping to stand out by removing charges levied on the sale of products such as electricity and airtime.
“This is a phenomenal example of shared value and prosperity. Correct, we’re not a charity, this is not an NGO but there is a mechanism [to make money],” he said.
Roper, who joined SA’s second-biggest mobile operator in May after a stint as CEO of FNB’s mobile division, is looking to disrupt the industry from which came.
He says that as a late entrant or newcomer to SA’s well-established financial services sector, MTN doesn’t have the legacy systems and fees that usually accompanies those services.
“So we have a cost advantage. We’re agile in nature, [meaning] we can take things from concept to delivery relatively quickly because we don’t have legacy systems and we also don’t have legacy fees that need protecting.”
MTN’s mobile money (MoMo) platform is underpinned by African Bank, allowing customers to access various services, including Lotto tickets, DStv account payments, electricity, besides buying airtime and data. These are all being offered without additional charges or fees.
Still MTN is certain to profit from the new offering.
“Essentially, we are a digital retailer. We sell these things on behalf of our partners because we are able to aggregate and we make a commission every time a customer buys one of these offerings,” Roper said.
MTN’s financial services growth in SA is hard won. The company first launched its mobile money platform locally in 2012 before pulling the plug in 2016 due to a lack of commercial viability because three-quarters of the population had bank accounts. Vodacom shut its M-Pesa mobile money service in SA in the same year, citing similar reasons.
Having taken a second swing from the start of 2020, the operator now has a base of 8-million users. The unit’s services include in-store payments, prepaid services, mobile wallets, micro-loans, micro-insurance, and a point of sale solution.
Vodacom has also taken a similar approach, offering various financial services such as loans for airtime and an e-commerce offering through its VodaPay app.
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