MTN SHRUGS OFF COVID, POINTS TO THE FUTURE

Mobile telephone operator MTN seems to have shrugged off the worst of the covid-19 economic slowdown, even emerging stronger and maybe pointing to future trends in the economy.

Last week parent company MTN released consolidated results for the group, which boasts 280 million subscribers, mostly on the continent. From those we were able to glean a few things about their Ugandan unit.

"MTN Uganda’s revenues were up 24 percent to about sh2.05trillion in 2020 from sh1.6trillion the previous year. This growth was driven mainly by a 45 percent rise in data revenues, understandable given the increased data usage during last year’s lockdown. Data revenues were up to sh370b last from sh254 in 2019....

Earnings before interest, taxes, depreciation and amortisation (EBITDA) crossed the trillion-shilling mark for the first time in MTN Uganda’s history, jumping 31 percent from the previous year’s sh775b.

I converted all the figures from South African Rand – using sh246 to the rand, so there maybe some variances to actual figures on the ground.

All this against the background that the company’s subscriber base grew to 14.2 million from 12.6 million in 2019.

As the leading player in the telecoms sector MTN serves as a bellwether of what’s to come.

While voice revenues went up by about four percent, data and fintech revenues shot up to 45 percent and 27 percent respectively. The trend, of low voice revenue growth and high data and fintech revenue growth has become established over the last five or so years.

Thanks to the covid lock down last year this trend can be expected to accelerate. Data subscribers grew 34.8 percent to 4.6 million.

The trajectory of Kenyan telecom operator Safaricom, the market leader in that market, could serve as a useful indicator of things to come for MTN and the industry in general.

As reported in Safaricom’s last annual report voice revenues plummeted to 34.5 percent last year from 42.5 percent in 2017. Going the other way Mpesa (mobile money) and data revenues showed growth of 6.6 and 1.8 percentage points respectively.

One can expect the same trend in our telecom industry looking down the years, that voice revenues will continue to slide while data and fintech revenues rise. Interestingly too, Safaricom over the years has seen reduction in withdrawals from mobile money accounts as people to transact with businesses directly rather than withdraw the physical cash...

Looking to Safaricom’s example accelerating the trend will depend on the spread of smart phones and reduction in data prices, add to that the increased data usage that persists after the covid lock down.

 Developments in the sector are moving very fast that it would take a brave man to try and project in to the future what will happen in 10- or 20-years leave alone next year.

I remember just before the lock down marveling at a niece who had a phone with a capacity of 32GB, I wondered what she needed all the space for. “Movies,” was her nonchalant response, with a look as if to ask, “Where have you been?”. With the lockdown I promptly burst my 5GB a month data requirements many times over and I went, Oh Okay!

I remember almost 20 year ago one telecom official saying it was not financially feasible to have lower denominations of airtime cards than the five thousand shilling one they had just released. Today you can buy as little as 100 shillings of airtime.

I remember even further back in my life time, that my first desk top computer was an IBM with a CPU with a capacity of 250 MB! It boggles the mind.

But former Safaricom boss Bobby Collymore gave us an idea of things to come. In an interview shortly after he took over the reins at Safaricom in 2010 he predicted that voice will one day be an add-on service given free to subscribers. That the action would be in data and other value added services – Mpesa had not yet taken off.

I could have laughed him out of town at the time, when telcos were heavily invested in delivering voice, were trying to promote texting and mobile internet was still a novelty.

And the scary thing is we haven’t even begun to tap the full potential of data services on our phones. Keep this for posterity.