MTN Groups financial results for the year ended December 2009 show that, despite the financial uncertainty that has swept the world over the past two years, the company is reaping the benefits of its increasing focus on m-payments.
The stand-out figure from the results was the 28% growth in group subscribers to total 116m worldwide, and this helped MTN Group revenues to rise by 9.2% from 2008 to ZAR111.9bn ($15bn), although fluctuations in foreign exchange rates mainly in the South African and Nigerian currencies dented profits.
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MTN Group president and CEO Phuthuma Nhleko said: "The solid performance of MTN operations in most of the countries in which the group has a presence was achieved despite economic challenges, increased regulatory changes and growing competition.
"Continued delivery in accordance with an aggressive network rollout strategy remained key throughout 2009, enabling MTN to maintain or improve its market share in most of its operations."
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By GlobalDataMTNs core mobile payment service, Mobile Money, has been launched to date in South Africa, Uganda, Rwanda, Ghana, Côte dIvoire, Benin and Yemen.
Having first been launched in Uganda in March 2009, Uganda now has more than 680,000 Mobile Money subscribers.
Uganda was one of five countries in which MTN began pilot trials in October 2008. The others were West African countries Cameroon, Ghana, Cote dIvoire and Nigeria where the mobile banking platforms are now fully operational. More recently MTN commenced five additional pilot trials in the African countries of Benin, Congo Brazzaville, Guinea Bissau, Guinea Conakry and Liberia.
The MTN MobileMoney service focuses on money transfers, bill payments and topping-up mobile air times, although there is the option of adding other functions. The service is available to all MTN customers, for both banked and unbanked accountholders.
MTN customers can transfer money to non-MTN customer recipients, who can visit an MTN MobileMoney agent to collect their funds.
With MTNs service this includes the option to receive an MTN MobileMoney-branded debit card that can be used to withdraw cash from ATMs.
MTN has opted for a SIM-card based solution to support its mobile banking service. With the SIM solution no data resides on the handset and all incoming and outgoing data is encrypted, giving consumers an extra level of security.
MTN has in many countries followed a policy of incorporating mobile banking and payments capabilities on all new SIM cards.
SIM swap programme
However, in some countries it will have to implement a SIM swap programme. Although the SIM-based solution is supported by MNO industry body the GSM Association, there is general agreement among those involved in mobile banking that other technology solutions also have a big role to play.
MTN Group is not resting on its laurels and is pushing ahead with ambitious plans to promote its brand and differentiate itself from its competition, and key to these is its expansion plans, which in 2009 were driven largely by acquisitions of internet service providers.
In early 2009, MTN acquired Verizon Business South Africa and integrated it into its Network Solutions business, followed by a relaunch of the unit focusing on converged services to the corporate segment. MTN Group is hoping that this unit, although based in South Africa, will act as a springboard into other African markets.
During the year, MTN Group also acquired 59% of iTalk Cellular, increased its stake in MTN Uganda from 95% to 97% and acquired a 20% stake in Belgacom International Carrier Services in exchange for selling 100% of its own international carrier service business.
It also completed a private placement of 2.2% of MTN Zambia in January 2009 and the sale of its 50% stake in DMTV Africa.
Strong subscriber growth
Looking at the breakdown in subscriber numbers, MTNs Iranian unit recorded subscriber growth of 45% to 23.3m during the year, increasing its market share to 40%, on the back of promotional campaigns such as loyalty programmes and discount products.
In Nigeria, capital investments in network capacity and the restructuring of the sales and distribution channel boosted subscriber numbers by 34% to 30.8m, giving it a market share of 49.6%.
MTN Ghana increased its subscribers by 24% to 8m, giving it a market share of 55% on the back of an increased distribution footprint, while in Syria, subscriber numbers rose by 20% to 4.2m at the end of the year, particularly during the second half, giving it a market share of 45%.
However, in MTNs home market of South Africa, the situation was more challenging given the more saturated nature of the market and increased regulation of the telecoms industry.
High churn and lower gross connections in the prepaid segment resulted in a 6.4% reduction in subscriber numbers to 16.1m.
New regulation
New industry regulations require mobile operators to register subscribers personal details and to date MTN has collected the details of 5.5m prepaid customers.
The postpaid segment was not affected to the same degree, and showed subscriber growth of 9.8%, mainly because of the increasing use of hybrid packages.
For the rest of 2010, MTN expects 20m more net additional subscribers, with Nigeria (6m), Iran (6m) and Ghana (800,000) being the top growth countries.
MTN said other challenges include an expected increase in competition across its markets particularly due to "fragile" economic conditions, though CEO Nhkelo said there are tentative signs of recovery.
