Having built an ecosystem to provide voice calls, cellular networks are ideally suited to provide the next wave of digital services and financial inclusion. "Mobile will be at the center of driving digital inclusion and connectivity," says Rob Shuter, Group CEO of MTN, the largest mobile operator in Africa.
It seems like a logical thing for the chief executive of a network to say but his point is well made that the vast ecosystem created by mobile operators is arguably better suited to financial inclusion than any other service provider.
"The mobile industry has a system which makes it as easy to buy minutes as it is Coca Cola," he told me at the MWC Barcelona conference last month. Operators have also established a customer relationship with its users that can be built upon for other services.
"Although internet adoption is low, voice and SMS are very high. We have over 100% in most markets," he says.
Unlike Europe or America, many emerging markets do not have a voice operator that covers the whole country. "The reality in our markets is we are the only one with a national voice network. We have the ability to repurpose that national network for data. We can turn it into a national data network, which doesn’t exist in our markets."
With that kind of infrastructure, the next generation of useful services can be built. MTN is not just the largest cellular operator in Africa, but also a significant player in emerging markets, including some high-risk countries. It has operations in Afghanistan, Benin, Botswana, Cameroon, Ivory Coast, Ghana, Guinea Bissau, Guinea Republic, Iran, Liberia, Nigeria, Republic of Congo (Congo-Brazzaville), Rwanda, South Africa, Sudan, South Sudan, Eswatini, Syria, Uganda, Yemen, and Zambia.
Of its 233 million customers in these 21 countries, MTN has 79 million active data subscribers and 27 million who use mobile money (MoMo). That is already a significant number of mobile money users, but he believes they can be grown.
"Mobile is central for driving inclusion," Shuter thinks, especially how mobile money can be used. Mobile phones give people the advantage of a bank account but without the restrictions of a branch-based system and with cheaper fees.
The former banker who took on the MTN Group job two years ago has had to weather numerous scandals in Nigeria, MTN's biggest market, and adverse market sentiment as a result that has seen its share price fluctuate. In its results for the year ending December 2018, MTN grew its customers by 16 million, its active data customers by 10 million and its mobile money service offering increased from 14 to 18 countries. Its group Ebitda rose more than 15% while service revenues growth was 10.7%, an increase from the 7.2% it grew in 2017.
Shuter is philosophical about what his company can achieve and should be striving to do. "The MTN core belief is that everyone deserves the benefits of a modern connected life. It's basically a vote for inclusion," he says.
He admits, that "sometimes people think this is a bit corny," but he is undeterred. Quoting Luke from the New Testament he says, "to those to whom much is given, much is asked".
"We have a huge endowment of assets and customers," and he thinks these users will see the value of mobile transacting. "We can play a major role in financial inclusion".
The 27 million people already using mobile money is comparable to the "active transactions for active customers of South African banks". South Africa has the most sophisticated financial services market on the continent, with all of its so-called big four banks – Standard Bank, First National Bank (FNB), Absa (formerly Barclays Africa) and Nedbank – having a presence throughout Africa.
Shuter believes MTN is "a born-free company" using a phrase in South Africa to describe children born after the country's first democratic elections in 1994. "It’s fair to say we are the largest born-free group that South Africa has produced." Other significant companies that have expanded out of their home market – like Naspers, South African Breweries (now part of AB InBev), FNB and Standard Bank (which is the largest financial institution in Africa) – are much older. South Africa's other major cellular network, Vodacom, is a subsidiary of Vodafone and has a large presence in Sub-Saharan Africa, including Kenya's Safaricom, which developed the original mobile money service, M-Pesa.
By refocusing MTN from selling voice towards data and services, and now mobile money and financial services, he believes it is 'redefining inclusion".
Cellular users already understand how to convert cash to airtime, so the transition to using mobile money should be an easy one, he believes. Airtime is a store of value in its own right for consumers. "They know they can put money in and have airtime in an e-wallet. The core principle of mobile money is to convert airtime to e-money, so people can then also send money and pay bills, schools fees, and other expenses."
Last year Shuter told the AfricaCom conference in Cape Town that he wants MTN to be “the biggest provider of mobile financial services in Africa". To this end, MTN and Orange announced they would create a mobile wallet joint venture so their subscribers could send mobile money between two of the largest cellular operators on the continent.
"We have a gold mine here, but it obviously needs investment and collaboration," he told me.
However, there are some obstacles to this grand vision, including the lack of regulation for mobile money services. To be a mobile money provider, operators need the requisite licenses, as do agents to be able to receive and issue cash
"I find this quite a fascinating story," Shuter says. "There's something in this conversation about repurposing airtime and SMS for data; and repurposing a prepaid wallet and an airtime agent network for financial services. This is the trick."
The most advanced markets are Uganda and Ghana, he says, which are MTN's largest mobile money markets. "In Ghana, mobile money revenue is more than 20% of the total company. So, it really can scale, and the economics are fascinating. You make a margin and profit on the mobile money service itself."
Secondly, the customers are much more loyal and churn (when users leave the network) goes down. Additionally, customers who buy mobile money with airtime means the network doesn't pay a margin to other agents or third parties.
"Commercially it's a very attractive business," he told me. "The trick here is we need people who understand mobile money."
Across Africa, a new generation of fintechs and banks have emerged, but Shuter doesn't see them as MTN's main competition. "The only thing we are competing against is cash. Our mantra for mobile money is: its better than cash."
As many surveys have shown, cash is actually expensive and has risks. To withdraw money from an ATM or from a supermarket cashier, people who live in rural or peri-urban places need to pay for transport, often to a nearby town. There is always the risk that people can be robbed or scammed.
A MasterCard study in 2017 found that the consumer cost of cash as 1.5-2% of GDP. "The burden of the cost falls on the lower income groups," Mark Elliott, division president of Mastercard, Southern Africa, told me at the time.
Cash, says Shuter the former banker, is a very inefficient system.
“Cash is a great thing to compete against. If we win and cash loses, nobody loses," he says. “It’s quite a cool thing. We can generate returns from building a better system.”
"We are excited about it. It’s not often what people really need, and what government want to deliver for them, is also a main agenda for a group like ours. I don’t think in life or industries these circles [often] intersect."
Another very useful offering are e-government services, including registration of births. This is still a massive problem in Africa, which, like drawing cash, require parents to travel to the nearest government office – that is costly and time-consuming.
"E-government is the best use case for mobile," says Shuter. "There are a lot of profound social benefits if we can get this right. That's why the mobile industry is still a good place to be. We are generally a for-good industry."
---
Autor(en)/Author(s): Toby Shapshak
Quelle/Source: Forbes, 22.03.2019
Bitte besuchen Sie/Please visit:
