MTN at it again with mobile payments


MTN is bringing back its mobile money service to SA three years after it shut down the platform because of “lack of commercial viability”. 

MTN has been on a strong push in recent years to diversify its business, pursuing new revenue streams in mobile data, enterprise technology and communications services, network roaming partnerships, financial technology (fintech) products such as insurance and digital services like music.

In July, MTN announced a plan to offer life insurance products in partnership with Sanlam, a R90bn a year opportunity the company said at the time.  

Group CEO Rob Shuter said “in time we’ll be more of a service business than a voice business”. He said the company plans to launch its Mobile Money (MoMo) service in SA during the second half of 2019.

MTN grew its fintech revenues by 30.7% in the first half of 2019 to R4.7bn, with 30-million MoMo users. The operator is hoping to achieve some of that revenue growth to the local market, having  processed a total of $44.1bn (R669bn) in transactions on the platform in the six months to June.

Despite a seemingly viable plan to grow its fintech business, analysts are not convinced if the service will take off in SA.

Ruhan du Plessis, technology analyst at Avior Capital, said there was definitely an opportunity in the local market to fill in the gaps left by traditional financial institutions in rural areas for example or places where banks have closed down branches. 

Regardless, Du Plessis said there was a much bigger opportunity for MTN’s MoMo to flourish in the rest of Africa as formal banking penetration is at a much lower rate on average. 

MTN first launched the platform locally in 2012 before pulling the plug in 2016 because of the lack of commercial viability in a country where about three-quarters of the population had bank accounts. This was also the same year Vodacom shut down its M-Pesa service in SA.

I’m not worried about Nigeria, Ghana or East Africa because mobile money is going to do well there. It’s already doing well in those places, Peter Takaendesa, portfolio manager at Mergence Investment Managers said. 

SA is a bit tricky. Mobile money has not done well here, he said.

He added that in MTN’s other markets, declining voice revenues are actually offset by the rise in fintech, combined with data. 

Nigeria’s central bank recently awarded MTN a licence that would allow it to provide financial services, which the company hopes to leverage to grow its mobile money business in that country.

The company said it will continue to work towards obtaining a payment service banking licence in Nigeria and plans to roll out MTN Homeland, a service allowing money to be sent to MoMo recipients in Africa from Europe.