MTN, Africa’s biggest mobile operator, is gunning to become Africa’s biggest bank.
The ambitious business strategy was revealed by MTN CEO Rob Shuter yesterday during the Deloitte Africa in 2018 Outlook conference in Woodmead.
“The core digital service that we have decided to put our money on is Mobile Money,” said Shuter.
“Mobile Money is really about leveraging the strength of the brand and leveraging the strength of the distribution because we have built a huge informal distribution network for prepaid airtime to bring customers into a transactional banking system.”
“We are a new age transactional banking provider and it’s a very big imperative for us, and the key thing we want to do is to scale it rapidly.”
According to Shuter, MTN wants to build Mobile Money into a 60 million customer business in the next three to four years.
“We will be the largest bank in Africa, leveraging scale, network, brand, infrastructure and distribution,” he noted.
Detailing the company’s other plans, Shuter said he is upbeat about the economies of Africa and the Middle East, where the telco has operations.
“We are very optimistic about what we see. For us, we see more opportunities than challenges. We see the need to focus on our core geographies and this is partially because this is where we see the growth. We see Asia-Pacific as the fastest growing economy but the Middle East and Africa are also following suit.”
MTN looks at the market in terms of three core customer segments – consumer, enterprise and wholesale, Shuter pointed out.
“If we look at consumer, what’s quite inspiring for us, looking at our geographies, is we have a population of about 650 million people across the 22 markets we operate in.
“In the next three to four years, that 650 million people is going to grow to 700 million people. An increase of 50 million people is the same as adding another South Africa to the portfolio. So that gives us a lot of opportunities, actually still in the traditional voice business – SIM penetration, voice, handsets, SMS, etc.”
The three biggest markets for MTN are SA, Nigeria and Iran, Shuter said, adding the economic conditions are improving. “In Nigeria, oil prices are coming back and inflation is coming under control.
“South Africa is also witnessing winds of change politically, while Iran is a market that is opening up, particularly to Europe, despite the rhetoric that we hear from the US.”
He said the other aspect that defines the market is the low level of Internet and digital services.
“When you look at the adoption of mobile Internet, we are talking 20% to 30% of these markets. These are markets with born-digital youthful populations – these are people who were introduced to the Internet on a mobile device.”
He believes there is also the potential for the adoption of digital services – Mobile Money, media, entertainment and social media.
“So there are a lot of positives in the consumer side of the business. If we are looking at the market size, we are looking at R500 billion to R600 billion in all the geographies that we operate in; that’s about two-thirds of the market. If you want to be successful for the long run in our industry, you have to be very well-positioned in the consumer market in terms of brand, products, network, technology, resources, etc.”