MTN: END OF AN ERA, THE FUTURE SHOCKINGLY BRIGHT

Last week MTN CEO Wim Vanhelleputte gave an exit press conference to a group of journalists in Kampala, during which he looked back with pride on what the company achieved during his six years at the helm and looked forward with some optimism to the company’s prospects in coming years.

By any standard the company’s progress over the last six years is admirable but also point to a company which is yet to reach full maturity.

In Wim’s first year at MTN revenues stood at sh1.3trillion while last year the company made sh2.1trillion,a more than 50 percent increment. More interesting is that profit after tax jumped more than fourfold to sh387b from sh96b during the same period. Wim explained that the company as becoming more efficient, the economies of scale are beginning to kick in.

Total subscribers almost doubled to 15.7m today from 8.6m in 2016.

But what was even more impressive was that despite all the work and investment MTN has poured into Uganda – more than sh900b in telecommunication equipment alone, there is still a lot more opportunity...

Wim noted that data revenues were outpacing voice and even mobile money and yet they have not rolled out their 5G networks and only starting to lay down cable for their fixed data network.

As a proxy for the industry MTN may not be perfect, when Airtel opens its accounts to the public later this year, we will have a better sense of the total industry.

One can expect that data and the fintech arms of the industry will be the main drivers of growth in coming years. Last year for the first-time revenues from MTN’s voice service was less than half total revenues.

With the benefit of time it would be interesting to determine the ripple effect of these mobile phone companies to the economy. How they have affected us on a day-to-day level.

Almost three in every four Ugandans now has a phone.

When MTN set up shop in 1998 we had 50,000 landlines belonging to UTL and another about 5,000 Celtel moblie phone lines. With a population then of about 23 million, there was a phone line for every 400 Ugandans. It must be one of the fastest improvements in phone coverage in the history of the industry.

So in the Vision Group which has about 1200 workers we would have three phones to share. Unthinkable today.

But imagine what this meant in terms of losses of time and money.

"Whole industries like bodas bodas, delivery services and the whole money transfer industry would be stuck with snail mail. Our relationships would still be quite manual (which may not have been a bad thing) with having to travel from place to place to keep in touch. We would still have to line up in banks for service....

I remember in the 1990s reading Bill Gates book “Business at the speed of light”. Look it up. It has chapters like “Information flow is your lifeblood”, “Create a paperless office” and “bad news must travel fast” among others. These subjects are now common talk but were revolutionary in 1999 when the book was published.

Gates as the head of Microsoft at the time, of course, was at the cutting edge of the ICT industry, he could see things then, we are only beginning to appreciate now.

“A good flow of information and good analytical tools gave us insight into new revenue opportunities among volumes of potentially impenetrable data. It maximized the capabilities of, human brains and minimized human labor,” Gates said in the book.

So, while Uganda has been good to MTN, MTN and the mobile phone industry has been good to us. We need to get over ourselves and look to how the industry can be helped more so that it can lubricate the economy further.

Wim had his thoughts on the subject. His suggestion was to cut or remove altogether taxes on the low value end of the smartphone market. This would increase data usage which would increase usage from the current 30 percent of phone users. This will not only broaden information flow it would inevitably lead to a lowering of data prices.

Going by the experience of voice calls, it now costs for a 30-minute call what it used to cost for two-minute call ten years or so ago, because the there are more users, the economies of scale are kicking in and allowing telecom companies to charge less per unit time.

Secondly, he suggested that government should actively drive digital payments.  As it is now with more than half the economy informal, a lot of economic activity flies under the radar going untaxed and not helping as many economic actors as it would, if these monies flowed through the formal financial system which the mobile money networks will soon dominate...

Wim, the longest serving CEO of MTN’s local unit, moves on to take up a regional position, it would be embarrassing if we cannot build on the momentum he has created.