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MTN’s multibillion-rand fintech investment pays off

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 11 May 2023
MTN Group president and CEO Ralph Mupita.
MTN Group president and CEO Ralph Mupita.

MTN Group’s multibillion-rand investment in its fintech platforms is paying off, after the operator‘s fintech business recorded a 17.9% revenue increase in the first quarter of 2023 (Q1 2023).

Last year, the telco pumped R38.2 billion into its fintech business, which includes mobile money platform MoMo, insurance, airtime lending and e-commerce, as well as its network services, as it accelerated its strategy to increase digital and financial inclusion on the continent.

In its latest trading update, the group says MTN SA delivered positive service revenue growth of 1.3% against the severe impact of load-shedding in the quarter.

This was boosted significantly by its fintech business, which garnered 4.1 billion (38.8%) transactions in the period, driven by MoMo, which grew by 5.2% to 61.7 million subscribers.

In terms of transaction value, its fintech services grew to $65.7 billion, despite a tough economic climate.

Overall service revenue grew by 15.1%, in line with the telco’s medium-term target.

“MTN’s resilient business model and operational execution enabled us to continue to successfully navigate difficult macro-economic, geopolitical and regulatory conditions in Q1 2023,” says MTN Group CEO Ralph Mupita.

“The blended inflation across our footprint remained elevated and averaged 18.5% in Q1 2023, compared to 11.5% in Q1 2022. Aligned with MTN’s portfolio optimisation focus within our Ambition 2025 strategy, the company continuously assesses our investments, with the aim of improving returns and reducing risk,” notes the group.

The overall subscriber base grew by 5.2% to 290.6 million, while voice revenue grew 4.7% and data revenue grew 27.6%.

Navigating power headwinds

Over and above reduced economic activity in SA, MTN SA’s network availability remained under pressure due to ongoing power outages across the country.

There were approximately 90 days of load-shedding in Q1 2023, compared to 14 days in Q1 2022.

“Against this challenging backdrop, we continued to implement proactive measures to sustain top-line growth and mitigate against inflationary pressures. In support of these interventions, we invested R6.4 billion in our networks and platforms in Q1,” says the group.

Looking ahead for MTN SA, the group says the remainder of H1 2023 will continue to present headwinds to the local business, with macro-economic and load-shedding impacts on service revenue progression and costs.

A number of initiatives are in place and are being executed to navigate the prevailing conditions, including innovative commercial offerings, cost optimisation, as well as investments into the resilience of the MTN SA network and business, it says.

“The postpaid price increases, effective from April 2023, should help to drive improved top-line growth in the business and mitigate inflationary impacts on the MTN SA business. This tariff increase will help to mitigate the decline in voice and improve data performance in the remainder of the year.

“MTN SA is driving growth through bundle rationalisation, improved phone and upgrade plans, as well as enhanced digital plans. There are also a number of initiatives under way to optimise pricing, including price-ups in selective prepaid plans and other portfolios,” says the group.