Rahul will takeover as the CEO of MTN Libya Lonestar Cell on November 1, 2020. Rahul replaces Uche Ofodile who departed in July to become the chief executive of MTN Benin.

Rahul De, who joined MTN in 2011 as chief marketing officer of MTN Ghana, spearheaded the team that is driving digital transformation in the country, from a voice and data centric organisation to one which drives a digital and fintech future. He has an MBA in International Business, a bachelor’s degree in science and 23 years of experience in the telecom industry.

Earlier this year, MTN announced an R250 million relief package to fight against the coronavirus pandemic.

According to MTN, the fund will focus on employees, customers, vulnerable groups, contributions to the government’s Solidarity Fund and participating in industry interventions.

In a statement, MTN’s group chair, Mcebisi Jonas said, “We believe it is the responsibility of all organisations to assist where they can during the pandemic. MTN plays a vital role in the mobile and telecommunications industry across Africa and the Middle East and it is vital that we assist our employees, customers, and stakeholders, during this difficult time.”

MTN also raised another R40 million for a global staff emergency fund to help its employees across all 21 markets it operates in.

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Reportedly, MTN is looking to offload around 15 percent the 79 percent majority stake it holds in MTN Nigeria.

Chief Financial Officer at MTN Ralph Mupita revealed that the impact of the pandemic on international financial markets doesn’t change the importance of selling part of the 79 percent shareholding to local investors.

With regard to the stake sale, he told the media, “In Nigeria we still want to do part of our retail offer, even if it’s a smaller part of the total planned sale. We are applying our minds to doing this at the moment.”

MTN was listed on the Nigerian Stock Exchange (NSE) last year, and is the country’s second-biggest publicly-traded company.

Nigeria is also MTN’s biggest market, accounting for a third of overall 2019 revenue and almost 40 percent of earnings before interest, taxes, depreciation and amortisation.

According to the Nigerian Communications Commission, MTN has around 69 million customers, making it the biggest telecom company in the country.

While MTN is going ahead with the stake sale in MTN Nigeria, Ralph Mupita revealed that the rest of a three-to-five year plan to dispose of $1.4 billion of assets will probably take a back seat.

The asset sales include an 18.9 percent stake in African online retailer Jumia, a R27 billion worth stake in Mauritius-headquartered IHS Towers, MTN Nigeria’s public offering and share sales to local investors in its Ugandan and Zambian units.

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During the same period, the company’s active subscribers also increased significantly to 25.2 million, which is an increase of 34.9 percent when compared to the previous year.

The increase in MTN’s subscriber base is attributed to various initiatives the telco launched last year to enhance coverage and drive data usage penetration. One of the important initiatives undertaken by MTN includes improving its 4G network coverage with over 6,000 additional sites leveraging 800MHz spectrum and repositioning its commercial data offerings.

Chief executive at MTN Nigeria, Ferdi Moolman told the media, “I am pleased with our performance in 2019, which demonstrates the progress we have made in the implementation of our BRIGHT strategy. Despite a challenging operating environment, we continued to deliver double-digit growth in service revenue in line with our medium-term guidance. Voice revenue growth remained healthy, and data revenue continued to accelerate, supporting a 12.6 percent increase in service revenue with an acceleration in growth to 14 percent year-on-year in Q4 2019.”

Besides reporting an increase in its subscriber base, MTN Nigeria also revealed that it added 5.3 million new smartphone users to its network, bringing smartphone penetration to 41.8 percent of our base, while data traffic rose by 85.8 percent.

MTN Nigeria is also planning to invest around N600 billion to overhaul its network in the country in the next three years. This investment will enable MTN to accelerate its 4G network expansion and simultaneously increase its subscriber base.

Overall, 2019 proved to be a good year for MTN Nigeria as it made significant profits, the company revealed in a statement. With the initiatives undertaken, MTN is expected to have a positive year in 2020 as well.

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According to MTN Nigeria’s financial report for the year ended December 31st, 2019, its network of mobile money agents served around 1 million customers in its first four months of operation.

MTN Nigeria, which is the largest mobile telecommunication firm in the country, further plans to add more mobile money agents to its network in Nigeria.

The telco further revealed that it has expanded its customer base by 10.5 percent last year, reaching 64.3 million subscribers.

Ferdi Moolman, who serves as the chief executive at MTN Nigeria told the media, “We continue to make good progress with the expansion of our super-agent network and are confident that the expanded service offerings will position us to effectively drive broader financial inclusion as well as roll out the payment service bank seamlessly, once we receive a licence.”

“In addition, we have seen a rapid acceleration in data revenue growth enabled by greater population coverage, a revamp of our data portfolio and initiatives to drive 4G device penetration. We added 5.3 million new smartphones to our network, bringing smartphone penetration to 41.8 percent of our base, while data traffic rose by 85.8 percent.”

Ferdi Moolman further revealed that the company’s income from fintech has also substantially increased by 23 percent last year. The telco plans to diversify its product offerings by adding cash deposits and withdrawals and bill payment facilities.

In the month of August 2019, MTN Nigeria’s subsidiary Yello Digital Financial Services launched its mobile money agent’s network.

The post MTN Nigeria adds 108,000 agents to its mobile money network appeared first on International Finance.

The investment by MTN will be used to boost connectivity in Nigeria.

The investment by MTN in Nigeria follows the Nigerian government’s decision to drop charges against MTN Group which alleged that the telco owed around $2 billion in unpaid taxes to the government.

At the same time, MTN Nigeria also dropped the $3 billion rights enforcement countersuit it filed against the Attorney General Abubakar Malami.

In a statement, MTN Group said, “MTN announced a capital investment programme of $1.6 billion over the next three years to strengthen and expand its network and operations in Nigeria. MTN remains committed to meeting its fiscal responsibilities and contributing to the social and economic development of Nigeria in collaboration with all stakeholders.”

Prior to the announcement, top MTN executives held a meeting with chief executive Rob Shuter and Nigerian President Muhammadu Buhari, where Buhari confirmed that the Nigerian government will drop the lawsuit and continue to provide MTN a suitable environment to do business and succeed.

Last year, MTN formed a five-member international advisory board to help the telco make better business decisions and tackle the problems it is facing in the African continent.

The advisory board included political heavyweights such as former South African president Thabo Mbeki, former president of Ghana John Kufuor and Dr Aisha Abdullahi, former African Union commissioner for political affairs.

According to MTN, it has around 233 million subscribers in 21 consumer countries across Africa. MTN also provides enterprise services to businesses in 23 different African markets.

The post MTN to invest $1.6 bn in Nigeria to boost connectivity appeared first on International Finance.

Their reliance on the informal financial instruments which involves acquiring loans from moneylenders, landlords, or a companions limits their ability to get the benefits of carrying out financial activities through the formal financial sector. Overall, financial inclusion has been poor in Nigeria. So was the case in many African countries.

However, in recent times, mobile money has brought in a revolutionary change in the continent and countries like Kenya have embraced the change. Data released by the Central Bank of Kenya revealed that mobile money transactions in the country stood at $38.5 billion last year, a 10 percent increase when compared to 2017. The face of Kenya’s financial sector changed after the establishment of M-Pesa in 2007. By the end of 2017, 83 percent of Kenya’s population had access to financial services, according to its apex bank.

But compared to Kenya, Nigeria does not have a similar story. The launch of the first mobile money service in Nigeria dates back to 2009. Over the years, a dozen new mobile money service providers have popped up in Nigeria. Around 90 percent of adults in Nigeria claim they have a mobile phone as well as a SIM card, however, mobile money hasn’t boomed in Nigeria as of yet.

The primary advantage mobile money enjoyed in Kenya over Nigeria was the regulator’s adoption of a wait-and-see approach at inception. Secondly, M-Pesa, the global poster child of mobile money in Kenya, was launched by the dominant telco in Kenya, and was able to piggyback on their already existing network of airtime distributors, thus eliminating the need to build out an extensive distribution network. Also, M-Pesa rode on the wave of political unrest in Kenya. During the 2007 and 2008 election crisis, there was political unrest that resulted in road closures and this affected the financial flows.

How mobile money is impacting banking in Nigeria

Authorities in Nigeria have finally amended rules and regulations that previously prevented wireless carriers to transfer cash. Around 50 million Nigerians still do not have a bank account, and the central bank finally realised that it must rely on wireless carriers in the country to improve financial inclusion.

Finally, telecom companies in Nigeria will be able to collect money, carryout payments, issue cash cards, and also provide financial advisory services. Under a new scheme introduced by regulators in Nigeria, telecom companies can apply for a payment service bank licence.

In July, MTN secured a licence from the Central Bank of Nigeria to provide financial services in the country. MTN Nigeria’s Yello Digital Financial Services will provide financial services in Nigeria such as money transfers. However, some experts believe it is the banks in Nigeria who will most benefit from it.

According to the terms and conditions of the licence, MTN Nigeria will have to tap into those Nigerians who still do not have a bank account. As a result, a lot of data about the unbanked Nigerian population will flow into the country’s banking sector. This data will help the banks in Nigeria target the ones who are unbanked and bring them under the banking umbrella.

Nigeria’s mobile wallet and payment market

At present in Nigeria, even though cash transactions still continue to be the most preferred choice for Nigerians, mobile money is seeing steady growth as well. Currently, there are 21 licenced mobile money services providers in the country. Paga, which was launched in 2009, continues to dominate the market with more than 8,000,000 users. However, the number is very small given that Nigeria is Africa’s most populous country.

Experts predict the mobile money market will grow substantially in the next five to six years in Nigeria. The market is expected to grow at a compound annual growth rate (CAGR) of 25.6 percent to reach $73 billion by 2025. Its mobile wallet segment, which is also experiencing strong growth, is also expected to grow at a CAGR of 25.7 percent between 2019 and 2025.

Besides issuing mobile banking licences to telecom companies in the country, the Nigerian Central Bank has taken the help of the Shared Agent Network Expansion Facility (SANEF) to improve financial inclusion in the country. The central bank aims to achieve a minimum of 80 percent financial inclusion by 2020. However, currently, 53 percent of the adults in Nigeria still do not have access to financial services.

Why is it important for Nigerians?

With the Central Bank of Nigeria determined to accelerate financial inclusion in the country, mobile money may prove to be the tool to do so. Around 90 percent of adults in Nigeria claim they have a mobile phone but most of them do not use mobile money services for various reasons. One of the major reasons that Nigerians do not use mobile money is the lack of infrastructure. Secondly, many prefer to use cash as a mode of transaction because the person they do business with prefers cash as a mode of payment. Also, many Nigerians are sceptical when it comes to giving up carrying transactions through cash.

It is highly important for Nigeria to improve the mobile money infrastructure in the country as more and more Nigerians will have access to financial services and they will come under the formal financial sector. This will ultimately accelerate Nigeria’s financial inclusion.

At the same time, the growth of mobile money in Nigeria will also help the country tackle its unemployment problem. With the issue of more licences, more players will enter the mobile money market in Nigeria. This will lead to the creation of various jobs within the sector.

Why mobile money concept is not successful in Nigeria

While mobile money has revolutionised how Kenyans deal with their money, make deposits, receive money or save money, Nigeria has failed to duplicate the same despite being the largest economy in the continent. It’s not just Kenya, but other African countries such as Uganda, Tanzania, Rwanda, Botswana, Senegal, Cote d’Ivoire and neighbouring Ghana have benefitted from the introduction of mobile money in their economies. Mobile Money has helped these countries stimulate financial inclusion.

The introduction of the Bank Verification Number policy in 2016 in Nigeria did not help either. According to the policy, every Nigerian who owns a bank account was required to link their biometric details with their bank account. This policy was introduced by the government so that every transaction carried out in the country could be traced. However, this led to Nigerians distrusting the financial sector and abandoning their savings out of fear of being interrogated.

In a bid to discourage cash transactions and at the same time encouraging more electronic-based transactions, the government in 2012 introduced a cash-less policy. As per the policy, the government charged a cash handling charge on daily cash withdrawals over N500,000 for individuals and N3,000,000 for businesses.

But all these policies seem to have failed in Nigeria. When it comes to mobile money, Nigeria is classified alongside Morocco and Egypt as sleeping giants by experts.Some of these headwinds are constraining factors limiting mobile money growth and success. They include insufficient infrastructure, inadequate knowledge about the underserved, financial literacy and consumer education and identity poverty. In the northern regions of Nigeria where exclusion is highest, infrastructure like power, roads and even mobile network connectivity are deficient and have significant implications on mobile money access and quality.

Some of the other challenges faced by Nigerians include their ability to access national identity documents. All the Nigerians who are not a part of the financial sector are not necessarily poor. Some of them may be cash-rich but they do not have access to national identity documents and their inability to fulfil mandatory customer due diligence (CDD) requirements are challenges they face in spite of the tiered KYC regulation. Also, awareness of mobile money in Nigeria is under 5 percent. Consumers can’t adopt what they don’t know or understand.

With regard to this, Dr. Olayinka David-West, from the Operations, Information Systems and Marketing Division of Lagos Business School and the academic director at the Enterprise Development Centre (EDC) of Pan-Atlantic University, told International Finance that, “I would like to introduce a new perspective – mobile banking – that has been remarkably successful. Nigeria is a mobile-first market and so, while mobile money (using a wallet as the store of value) has not been widely adopted, mobile banking on the other hand has. Mobile banking solutions provide access to bank accounts using either mobile apps (available on smartphones) or unstructured supplementary service data (USSD) protocol (available on all phone types). Mobile banking’s popularity continues to rise year on year, based on transaction figures reported by the Nigerian Inter-bank Settlement System (NIBBS). Hence, I can narrow the perceived failure of mobile money in Nigeria to the lack of acceptance of the wallet as a store of value.”

How regulators promote mobile money in Nigeria

With authorities making amendments to rules and regulations and introducing new policies, telecom companies in Nigeria can provide financial services which were once limited to banks. Telcos in Nigeria can now apply for a payment banking licence and carry out all banking activities such as collecting deposits, making payments, issuing cash cards and also providing financial advisory services.

While MTN has already acquired a licence from the Central Bank of Nigeria, Bharti Airtel, another telecom giant in Nigeria is also in line to acquire a licence. Over the years, many in Nigeria have argued whether the decision to provide payment banking licences to telcos is a good idea. But the current Nigerian government has realised telecom companies should be allowed to provide financial services, especially after witnessing the mobile money revolution in Kenya.

Many banks in Nigeria also feared that the entry of telecom companies as payment banks would hurt their business and they will end up losing their customer base. This led to years of lobbying by the Nigerian banks which delayed the Nigerian government’s decision to issue payment bank licences to telecom companies.

The National Communications Commission and the Central Bank of Nigeria finally signed a memorandum of understanding in 2017. A year later, authorities revealed the guidelines for the licencing and regulation of the payment bank licences.

How can MTN make mobile money work?

In a bid to tap into the mobile money sector, MTN Nigeria’s subsidiary Y’ello Digital Financial Services Limited launched its mobile money services in the country called MoMo agents.

Y’ello Digital Financial Services Limited has been issued a super-agent licence, which allows them to manage and sustain a network of financial service agents and provide services on behalf of licenced financial services providers. This is very different from the Payment Service Bank licence which is a recent development within the Nigerian financial service industry and allows licencees to offer payments and remittance services, issue debit and prepaid cards, deploy ATMs and other technology-enabled banking services.

To avail the services, all the user needs to do is send a free text. As a response, the user will get a list of active MoMo Agents near him, through a text message. To send money, the user pays the MoMo agent the sum who in return generates a code. The receiver can walk up to another MoMo near him and collect the transferred sum with the help of the same code.

Dr. Olayinka David West told International Finance, “As such, MTN’s entry into the financial services industry is still early. The super-agent licence is a good foundation for the company to build out its financial services distribution network which is critical to the success of any mobile money operation.”

MoMo has been a success story for MTN in other markets especially Ghana. Experts predict that the launch of MoMo in Nigeria will prove to be significant for MTN. Besides funds transfer, through MoMo, a user purchases data and airtime, and pays bills.

During the launch, the company said it will roll out about 500,000 MoMo Agents across all 36 Nigerian states. MTN, which is the biggest telecom company in Nigeria, acquired a licence to provide financial services from the Central Bank of Nigeria earlier in July.

When International Finance asked how mobile money operators in Nigeria create profitable operations, Dr. Olayinka David-West said there are five important parameters the operators in Nigeria must understand.

First, They need to understand that the mobile money business is a long term investment and requires patient capital to get to profitability. They also need to understand the market they serve and provide compelling value propositions to meet the needs of customers. This can only be done by using the appropriate customer segmentation frameworks to inform the design and delivery of their services, Dr David-West said.

Distribution is important, according to Dr David-West. Providers should consider extending their business to the areas where exclusion is highest, especially the northern regions and rural areas. The uniqueness of the Nigerian market requires mobile money operators to think creatively about customer acquisition and retention. They also need innovative business models that will optimise their reach while reducing operating costs.

Operators in Nigeria also need to forge strategic partnerships that will enhance the reach of their services, reduce their cost to serve, improve affordability as well as their value proposition.

Dr. Olayinka David West added that the quality of the service needs to be good enough to provide a positive experience for the consumers and hence, reduce customer churn. This means operators need to invest in efficient IT platforms with appropriate interfaces and an overall positive user experience.

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According to reports, MTN will start charging its customers in Nigeria for USSD transactions on the directive of bankers committee, despite the CBN’s objection.

On Sunday, MTN subscribers in Nigeria received a text message informing them that the telecom company will start charging them for USSD voice or text message.

CBN Governor, Godwin Emefiele revealed that he held a meeting earlier this year with Nigeria’s leading telecom companies including MTN and banks and discussed USSD transactions. The conclusion of the meeting was that the use of USSD is a sunk cost and is not an additional cost on the infrastructure of the telecom companies.

However, the telecom companies were not in agreement and according to them, it’s an additional investment that needs to be imposed. Over the last 30 days, the cost has been increased to almost 300 percent.

During a press briefing at the sidelines of the World Bank and IMF meetings, Godwin Emefiele said, “I have told the banks that they have to move their business, move their traffic to a telecom company that is ready to provide it at the lowest possible if not zero cost. That’s where we stand and we must achieve it.’’

According to data released by the Nigerian Communications Commission, MTN Nigeria has lost more than 600, 000 data subscribers between July and August 2019. However, MTN continues to dominate in the Nigerian market with a market share of 37.20 percent.

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As MTN celebrates its 25th anniversary, the company in a statement said that it has reached 95 percent 4G coverage across South Africa – giving almost all of South Africa access to new and disruptive online services through a global, high-performing network.

The company also revealed that it has broad 3G coverage in rural South Africa.

Over the years MTN has worked extensively to improve its connectivity reach, especially its 4G coverage in South Africa. In the last four years, the telco has invested around R40 billion to improve its network coverage and quality. It has adopted a new pricing method to stay competitive in the fast-growing telecom market.

MTN South Africa’s microwave link network serves more than 70 percent of the businesses in the country. Its fibre network spans over 18, 000 kilometres and has the capacity to serve almost 30 percent of the businesses in South Africa.

MTN South Africa CEO Godfrey Motsa told the media that, “Our network modernisation programme has come at the perfect time. It will enable clients to extend their computer networks over large distances and to connect remote branch offices to data centres and each other and to deliver the applications and services required to boost functionality.”

He added, “Our network is future-ready as we look forward to the next 25 years as South Africa’s best and most trusted network. We plan to roll out new digital business models to make sure value creation is shared and the benefits of the digital economy truly uplift and benefit many more lives.”

Last month, the Independent Communications Authority of South Africa fined MTN R5 million over an alleged corporate non-compliance. In 2015, MTN was fined in Nigeria for a similar offence.

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It is noteworthy that despite losing thousands of internet subscribers, MTN still continues to dominate the industry with a 42 percent market share. Airtel, meanwhile remains second after MTN with an estimated 32.7 million subscribers and a market share of 27 percent.

While MTN lost a record 667, 245 internet subscribers in August alone, interestingly, Airtel gained 350,134 internet subscribers in the same month, making it the only internet service provider in Nigeria that recorded positive growth, alongside Visafone with 83,482 internet subscribers.

According to reports, MTN also lost around 178,103 internet subscribers in June.

The report by the NCC conducted the study taking into account five major internet service providers -MTN, Airtel, 9mobile, Globacom, and Visafone.

While the sudden drop in internet subscribers may be caused by poor connectivity; many argue that the recent xenophobic attacks in South Africa may also have had an impact. According to reports, Nigeria’s internet download speed is among the slowest in the world.

Earlier this year, MTN Nigeria launched MoMo agent, its mobile money platform. Through MoMo agent, MTN Nigeria aims to provide financial services to unbanked Nigerians. MTN planned to rollout about 500,000 MoMo agents across Nigeria, however, not much has happened so far on the ground level.

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Kuda recently launched the beta version of its online mobile finance platform. It was granted a banking licence by the Central Bank of Nigeria — differentiating it from other fintech startups. 

The proceeds from the pre-seed funding might be used for it to transition  from beta to live launch in Nigeria by the last quarter of 2019. 

Kuda Founder Babs Ogundeyi told TechCrunch “Kuda is the first digital-only bank in Nigeria with a standalone license. We are not a mobile wallet or simply a mobile app piggybacking on an existing bank. We have built our own full-stack banking software from scratch. We can also take deposits and connect directly to the switch.” 

Currently, Kuda as part of its banking services offers no-monthly fees on checking accounts and a free debit card. It also has plans to offer consumer savings and P2P payments options on its platform in the next few months. 

Media also reported that Kuda is venturing into a relatively strong revenue driven market in Nigeria. Nigeria is slow in adopting digital payments, compared to other African countries such as Kenya, observed the McKinsey Company and Gates Foundation analysis.

The analysis also shows that Nigeria could reach digital payments revenue up to $1.3 billion if it achieves the level of penetration as Kenya. 

In July, MTN Nigeria was granted a payments licence by the central bank to offer financial services in the country. Its Yello Digital Financial Services unit will offer seamless money transfers and other financial services. 

GSMA study found that Nigeria, Ethiopia and Egypt are Africa’s mobile money sleeping giants’ — and they could add more than 110 million new mobile money accounts over the next five years. 

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