MTN Aiming For Money Mobile Comeback in SA Following Return to Profit

MTN Aiming For Money Mobile Comeback in SA Following Return to Profit

Two years after axing its mobile money offering in South Africa, MTN is looking to make another push into financial services in its home market.

MTN CEO Rob Shuter has confirmed that the company is developing new financial services products around loan offers, investments and insurance as part of a drive to strengthen its presence in the sector and increase its subscriber base in South Africa.

The operator abandoned its mobile money business in South Africa in September 2016 citing a “lack of commercial viability”. The market has one of the better financial penetration rates in the continent. MTN was not the first operator to make such a decision, with Vodafone shutting down its mobile money offering in the market a few months earlier.

MTN also saw its mobile money offering falter in Iran – its third biggest market – under similar circumstances. However, as a group it has 22 million mobile money customers across 14 markets, and Shuter is aiming to bring in new services to increase this number. In 2017 MTN launched mobile money services in Sudan, and Shuter noted that launches in two Middle Eastern markets are planned.

Referring to the group’s key markets of Iran, Nigeria and South Africa, Shuter said “we need to have a proper strategy for the three large ones”. MTN was not granted a full licence for Nigeria which prevents it from increasing its base of 2 million subscribers in the country, and it registered a loss in subscribers in Q3.

At the end of 2017, MTN’s subscriber base totalled 217 million, a significant drop from 240 million at the end of 2016. The fourth quarter saw the group lose 13.2 million subscribers, with the falling base attributed to “reclassification of subscribers” in several markets such as Cameroon and Uganda, which respectively disconnected 3 million and 750,000 users due to new regulations.

Faced with such difficulties across several markets, MTN is reviewing its offering to make sure that its units are “an appropriate strategic and operational fit taking into account demographics, regional synergies and business and regulatory environments”. The assessment could result in “shifts” in the group’s portfolio.

MTN also noted that units in conflict markets are under review to make sure that they do not require overhead investment, stating: “we are closely monitoring those operations that are not cash flow positive and will take appropriate action as required.”

Following a net loss of ZAR3.1 billion ($260 million) in 2016 – its first annual loss for 20 years, largely attributable to the massive fine it received in Nigeria – MTN registered a profit of ZAR4.5 billion in 2017. Shuter noted that “difficult economic conditions” – i.e. the strong performance of the Rand – had not prevented MTN from returning to profit, with its earnings “driven by robust growth in data revenue (on a constant currency basis), supported by the combination of improving customer service and more stable and competitive networks”.

The group is restructuring some of its African units, with a Nigerian IPO on the cards for 2018 along with the planned listing of a minority stake in its Ghana business on the local stock exchange. The latter move is due to the terms for its 4G licence, which requires the group to bring in local investors.

In addition, MTN is planning to lower its debt by selling its 29% stake in IHS Towers for around ZAR27 billion ($2.3 billion) if the tower firm opts to proceed with an IPO. Rumours about a potential public listing of IHS - which is Africa’s largest towerco – first surfaced in 2017.

Sign-up to our weekly newsletter

Keep up-to-date with all the latest news, articles, event and product updates posted on Developing Telecoms.
Subscribe to our FREE weekly email newsletters for the latest telecom info in developing and emerging markets globally.
Sending occasional e-mail from 3rd parties about industry white papers, online and live events relevant to subscribers helps us fund this website and free weekly newsletter. We never sell your personal data. Click here to view our privacy policy.