MTN SA sees a gap in digital payment services for street traders and aims to aggressively grow its mobile money platform to reach 3.5-million users in the next two years.
CEO of South African operations Charles Molapisi said this week: “There is an [opportunity] for a proper fintech [player] for the low base segment of the market. In townships people are trading and collecting cash, so we think we can solve the problem.”
He was responding to questions from analysts at the MTN Group’s capital market day on Thursday about the company's plans for its mobile money platform as its rival, Vodacom’s Vodapay, has a range of features including e-commerce, lifestyle and finance.
Molapisi said while MTN Mobile Money (MoMo) is finance-centric, the company also has the Ayoba platform which features music, games and chat services.
At the end of March, MTN had 1.1-million MoMo customers in South Africa representing growth of 31.8% year on year. MoMo provides a range of services including loans, payments and international remittance and it has increased other value-added services such as betting, forex and equities trading and gaming.
“We believe there is a clear story for fintech in South Africa — the same level of trading that happens in Ghana happens here in Soweto, Eldos and Zandspruit. People trade on the streets. Our aim is clear: we will grow this [MoMo] by 2025,” said Molapisi.
MTN and Vodacom are recording year-on-year growth in their fintech businesses. However, a study by consultancy firm PwC said that to compete effectively with financial services companies, telecommunications companies need to put immediate measures in place to improve their customer service and support capabilities.
According to research by PwC and DataEQ on the South African Telecommunications Sentiment Index, the industry ranked last in terms of consumer sentiment for the third consecutive year when compared with the banking, insurance and food retail industries. While all five telcos — MTN, Vodacom, Telkom, Cell C and rain — included in the index scored negatively, MTN obtained the highest net sentiment of -5.2%, largely due to positivity driven by brand campaigns.
Elmo Hildebrand, PwC Africa telecommunications, media and technology leader, said South African telco providers were transforming their business models, looking to use their scale and customer relationships to diversify into a range of digital lifestyle services.
“While telco business models are changing rapidly, customers still expect the basics to be done consistently and to a high standard, and the data shows us that telcos are falling short in this respect compared to banks and insurers.”
VodaPay has 3.3-million registered users. The company plans to scale lending, insurance and payment products, including cash-in and cash-out, “while creating new business cases for remittances and wealth management”, group CEO Shameel Joosub said last month when the company released its financial results for the year to March.
MTN Group has ambitious plans to have 100-million MoMo subscribers by 2025 across the countries in which it operates — up from 69-million.
The bulk of the customers are expected to come from Nigeria, where it aims to increase its 14.9-million MoMo users to 30- or 40-million.
Serigne Dioum, MTN Group chief fintech officer, said the group is positioning its fintech business as a platform “to make sure we are open to everyone to work with us … and bring some innovative offerings and services”.
The group is in talks with potential strategic minority investors for its fintech business with plans to conclude deals by the end of the month.
MTN Group CEO Ralph Mupita said as part of its plans to grow the business it may enter new countries on a mobile money basis rather than as a mobile network operator.
Another area of growth for MTN Group is fibre — for the home and wholesale. It will use multiple technologies including fibre wireless access to increase its coverage. It has 2.36-million homes connected and aims to increase that to 10-million, with Nigeria expecting to contribute 5-million and South Africa about 2-million. Other key markets for home fibre include Ghana, Cameroon and Uganda.
Jens Schulte-Bockum, MTN Group COO, said historically the group had not focused on homes but since it started doing so, it saw growth of 40% year on year. Its focus is on using its successful mobile network to drive growth.
Schulte-Bockum said the group’s “quite rapid evolution to 10-million will be possible”.
A lot of high-value households are expected to move to home networks as their primary connectivity, with mobile connectivity as a bolt on, in line with trends in developed markets such as Europe.
He said the home market “is a very local strategy that needs to be adapted to the realities of specific markets”.
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