MTN AND THE SIGN OF THINGS TO COME

Last week MTN publically released its results for the first time in its 23-year history in Uganda.

This was necessary as they are now listed on the Uganda Securities Exchange (USE), for which it is mandatory to report publically on the company financials at least twice a year.

The Telecom company reported that revenues grew 9.4 percent to break through the sh2.04trillion mark, the only Ugandan company to do so.  The increased revenues were driven mostly by data sales and fintech (mobile money services), which jumped 22 percent and 10 percent respectively.

New shareholders will share among themselves sh105b in dividends for owning the share for the last 25 days of last year. The dividends per share will be sh4.7. The total dividend paid out sh15 per shares, sh11 in dividends was paid out before last year’s share offer.

That was all very nice but the results also pointed to the new trends cementing themselves and bound to affect the way we relate and do business into the future.

For starters, for the first time in MTN Uganda’s history revenue from voice calls -- sh1.01trillon fell below half of total revenues. While voice revenues grew 3.6 percent compared to the previous year, this was dwarfed by growth in data and mobile money services....

More than a decade ago when Bobby Collymore took over the reins at Kenya’s Safaricom, he said in his first interview that, in the future voice services will be an add on, given away for free by telecom companies that the action was going to be in data and mobile money services. I couldn’t relate at the time but we see it come to pass before our very eyes.

While the growth in data and fintech can be blamed on the Covid-19 restrictions of the last two years, industry players are confident that the use of both services instead of falling back to pre-covid levels will in grow faster into the future.

To that end MTN is making smartphones available more conveniently through hire purchase schemes. More than 100,000 phones were acquired these schemes and have accounted for some of the increased data usage. Almost a million new data subscribers and 1.5 million new fintech subscribers were signed onto the MTN network.

Assuming this growth continues we are heading very quickly towards a cashless society, bill payments grew 58 percent and merchant payments grew by 14 percent.

Even more startling for me was that mobile money deposits grew by sh300b to sh960b, a 46 percent growth which in itself account for the total deposits of some of our smaller banks. While MTN cannot finance its business using these deposits they still constitute a huge proportion of the monies we saved under our mattresses or in our socks or bras, being brought into the formal financial sector and therefore more useful to the general economy. Assuming the current rate of growth continues these deposits will double every two years, if you extrapolate this into the future, it boggles the mind how big these deposits will have grown to.

It is obvious that MTN and telecom companies in general, will be a great driver of financial inclusion, resource mobilization and even economic transformation...

It happening already in parts of the country where early adopters are saving on their phones or running their accounts in their SACCOs via their phones, borrowing and investing off their phones.

One of the biggest factors in income inequalities is a lack of information. Ground down to its most basic level, you are poorer than your rich neighbour because you do not know something he knows. And once you have the information can you act on it? Now with data services becoming more and more pervasive we can get the information and with fintech going the same way we can act on what we know, in real time.

It follows therefore that it is in the economy’s best interest that tools such as smart phones are held by more and more people. In South Africa eight in every ten people has a smart phone, business there moves at the speed of light.

It was reported recently that Sweden has the most internet startup per capita of every country in the world. Looking back to how this came about, it was traced back to a government policy in the early 1980s that sort to have a computer in every house. The children of that time, who were exposed early on to the computer, leveraged their familiarity they had developed playing Space Invaders into programming and eventually building tech companies.

While there is momentum in adopting these new technologies government can speed it up by revisiting its tax regime around the ICT sector as a means to increase especially smart phone penetration and data usage. We will not be reinventing the wheel, oy has been done before and with great success.