In the next five to 10 years, MTN predicts that as much as half of its revenue will come from digital services such as e-commerce and financial services, as the company transforms itself into more than a connectivity provider.
Although the company - like its local rival - realises the necessity of driving additional income streams to boost revenue, it has yet to make any serious headway. MTN's revenue pressure can be seen clearly in its interim numbers - with the top line only gaining 4.1% to R72.8 billion when currency gains are stripped out as voice income continued to slow.
MTN president and CEO Sifiso Dabengwa says the group sees a "huge opportunity" to tap into e-commerce on the continent, especially as penetration is very low. MTN, which already offers mobile money, also wants to move more firmly into financial services, he says.
Making plans
The cellular company - Africa's largest - is looking at what other services it can put on top of its infrastructure as it is "clear mobile can do more than just basic telephony," says Dabengwa. He notes the company is looking at over-the-top offerings, as well as content, e-commerce and financial services like insurance, and "there is no limitation to what we will look at".
MTN, which has 215 million subscribers in 22 countries, has already taken the first step towards earning as much as half its income from digital services in the next five to 10 years after wrapping up a partnership deal with Africa Internet Holding and Middle East Internet Holding.
That partnership is an exclusive vehicle to drive e-commerce opportunities across the continent, and potential areas of collaboration have already been identified. MTN expects to wrap up another deal with a content provider, and go to market with a new offering by year-end, says Dabengwa.
This will be in addition to its streaming music service, which it announced last month after it inked an exclusive partnership with South African-based Simfy Africa. MTN is also looking at what digital platforms to launch on a country-by-country basis, and expects to have a clearer picture in the next six to 12 months, says Dabengwa.
Has to happen
World Wide Worx MD Arthur Goldstuck says telecoms companies must transform as they can no longer afford to just be a pipe. "It is blindingly obvious they must play a role in providing content. However, the problem is that telcos have been forced to be mere broadband providers by over-the-top players like Facebook, and have previously been unwilling to partner with companies that could add content to their connectivity offering."
Goldstuck says the operators shot themselves in the foot by trying to hold onto too much of the business, as they were previously not willing to get involved in partnerships. Although they are "still limping along from that self-inflicted wound," there is now a shift towards embracing content, he notes.
Vodacom has also been dipping its toe into content provision and has been exploring a number of options. "We're seeing the move globally for more and more content to be delivered via mobile and we want to make sure we stay on top of this," it has said.
Goldstuck notes MTN needs a strategy, not just a vision, and it needs to be nimble. He adds the company understands the future importance of digital content, but lacks the strategy to leverage that vision. "They can't talk about a bold new digital world and not spell it out."
If it will take a year to declare its vision, the company will not see e-commerce becoming a major revenue stream in the next five years. "They see the potential, but do not have a clear idea."
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