In just four years, MTN has rapidly built a mobile money service that has become larger than its traditional telecommunications offering in the South African market.  

In August 2019, MTN ramped up the launch of a mobile money transfer service called MoMo (short for mobile money) in countries such as Nigeria, Uganda and Ghana, targeting consumers who don’t have access to formal banking services. The service allows consumers to store, send and receive money using their cellphones.  

MoMo mainly serves consumers in the rest of Africa and largely not in South Africa, which has more sophisticated banking services and whose population is mostly banked. This means that many consumers in South Africa have access to formal banking facilities.

In just four years, MoMo has garnered more active users than MTN has in its traditional South African operations, which mainly consist of voice and data services. For the six months to the end of June 2022, MoMo managed to grow the number of customers who actively use the service by 24% to 60.7 million. This is nearly double the number of customers that MTN has in South Africa, which reached 35.3 million during the same period.  

The level of growth in customer numbers at MTN’s South Africa operations (including its voice and mobile data services) didn’t come close to MoMo’s, with the former’s growing by 8.9% vs 24% by MoMo.

MoMo has become so popular that it generated a transaction volume of six billion over six months which was worth $116.3-billion.

MTN’s new mobile money business is becoming a serious component of revenue generation for the entire telecommunications group. MTN wants to use MoMo to push into the fintech (financial technology) arena, diversifying from its traditional voice business, which is in decline. The trend of decline is also occurring at other telecommunications companies.

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MTN has a goal of generating about 20% of its group revenue over the medium term from fintech services. It currently generates less than 10% of group revenue from its nascent fintech business.

MTN said the uptake of its MoMo service could provide the foundation for the company to offer consumers a full range of fintech services — beyond mobile money transfers to include taking deposits and offering insurance cover and term loans. MTN wants to use its telecommunications infrastructure to ultimately become a de facto bank. It wants to do this mainly in Nigeria, where the MoMo takeup has been strong — MTN Nigeria’s MoMo service has garnered more than nine million active users.

To launch a full suite of banking services (including lending to consumers) in Nigeria, MTN required a final licence from the country’s financial regulator. In April, MTN was granted a financial licence, which market watchers said will be a game-changer because the company will compete with Vodacom and Safaricom in the rest of Africa.

Nigeria has a huge user base and a big portion of its population is unbanked, meaning that there are big opportunities in the fintech space for telecommunications companies.

Vodacom and Safaricom operate a fintech business called M-Pesa, which has enjoyed immense success in Kenya, Tanzania, Mozambique, Lesotho, Ghana and Democratic Republic of the Congo. Consumers in these markets don’t have much access to formal banking facilities. DM/BM