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.

 

WHAT CAN WE SAY ABOUT JOHN POMBE MAGUFULI

Former President John Pombe Magufuli breathed his last on Wednesday evening.

His death was an exclamation mark on the last few days, when he had been uncharacteristically out of the public eye. Speculation had been rife that he had contracted Covid-19 and, depending on who you listened to, he was already comatose, shuttling frenetically between Tanzania, Kenya and India to save his life or dead altogether.

The official version is that he died of cardiac arrest.

"In death as in life the man known as the bulldozer –  lovingly or with dread, sharply divided opinion....

Little known is that after his A-level he trained as a science teacher, before he upgraded to a degree and eventually earning in doctorate in chemistry in 2009.

He jumped into politics in 1995 and before he ascended to the presidency he served as transport and works minister, where he earned the moniker “The bulldozer”. His emphasis on infrastructure development as president was obviously influenced by his work in the ministry. Magufuli is credited with pushing projects such as the development of the Standard Gauge Railway, expansion of the Dar es Salaam port, the liquefied natural gas plant among others. His place in Uganda’s history is cemented if only because he was keen that the Hoima-Tanga oil pipeline get off the ground quickly. He openly expressed impatience with Ugandan bureaucracy, whose lackadaisical attitude he could not wrap his mind around, as he had almost absolute power to implement projects in his own country.

His urgency to develop Tanzania’s infrastructure however, contradicted his perceived skepticism about the East African Community, which while he signed up to all the protocols, his government actively discouraged exports from Kenya and Uganda and made working in Tanzania hostile for workers from the region, despite efforts to free the movement of labour around the EAC.

The last part was an understandable reaction from a country, which many years ago under Julius Nyerere took the step to have all their education carried out in Kiswahili. This has hobbled their workforce, making them uncompetitive against their English speaking counterparts in the region. This policy, while it ringfenced jobs for Tanzanian citizens, is unproductive in the long run as it will affect investment into the giant east African nation. The saving grace for Tanzania, maybe that it is so well endowed with natural resources they can write their own check—for now.

Magufuli was voted President of Tanzania in 2015 and quickly captured the public imagination with his campaign against runaway public spending and official corruption. He was not averse to making spot inspections of schools, hospitals and other public institutions, asking hard questions and firing officials on the spot when they waffled and whittled under his withering gaze. The public loved it. He was just the man to fire up Tanzania’s famously sleepy bureaucracy.

Through sheer force of character Magufuli got the public servants, some would say, to accomplish more in terms of public works, in his first term as president than was achieved under previous administrations.

Obviously he stepped on many toes along the way, especially entrenched interest groups that had enjoyed and profited from the status quo.

But the emperor had feet of clay.

Magufuli’s doggedness in trying to lift Tanzania up from the boot straps required an unwavering conviction in his own beliefs and that seemed to work for other things.

Last year the covid-19 pandemic broke out, sweeping from Asia into Europe and the Americas leaving a trail of illness and death in its wake.

As countries scrambled to contain the spread by instituting restrictions on travel and congregation, Magufuli emerged as one of the biggest denialists of the pandemic. He spurned the standard operating procedures promoted to slow the disease spread – washing hands, wearing masks, social distancing and rejected calls to lockdown his country. Tanzania stopped reporting the number of victims and deaths due to Covid-19 in April last year. He went further and declared that Tanzania was Covid-free when neighbouring countries were beginning to report an uptick of cases.  

It will remain a mystery how a scientist, albeit former seminarian, could ignore all the evidence about Covid-19 and choose a contrary path, but whose negative after effects will resound through Tanzania’s history.

Since the beginning of this year some high profile people have died of Covid, like Seif Sharif Hamad, Zanzibar’s first vice-president and it was becoming harder to sweep the situation under the carpet.

As one of his last public pronouncements at the end of February Magufuli conceded that there may be a problem and urged Tanzanians to wear masks, for him it may have been too little too late.