Middle East retreat
Outside Africa, MTN will exit Middle East operations “in an orderly manner over the medium term”, after growth in the region was hampered by security issues and controversy surrounding the firm’s 49% minority holding in the Iranian government-controlled Irancell, which drew the ire of a US government which is sanctioning the Islamic Republic.
With all eyes now back on Africa, MTN could target an entry into Ethiopia if the government forges ahead with plans to partially privatise state telecom provider Ethio Telecom and open the sector to foreign competition.
“Ethiopia is a low-income market, with low mobile penetration levels, but that’s likely to change,” says Pater. “Ethiopia is one of the two highest growth markets from an economic perspective currently in Africa, and the population will have more disposable and discretionary income; and with MTN’s track record it’ll be relatively easy to gain market share once they enter the country.”
Pater says MTN will also target a move into Angola, having failed to win in the previous licensing round.
Withdrawal from non-African markets and consolidation and expansion on the African continent will likely characterise Mupita’s early tenure, but overseeing MTN’s renewed efforts in mobile money and a continued push into Nigeria could define his legacy. By 2025, the mobile money market across Africa could attract 850m customers, supporting $3tn in transaction volume, and $30bn in yearly revenue from financial transactions alone, according to Boston Consulting Group.
M-Pesa, jointly owned by Kenya’s Safaricom and South Africa’s Vodacom, has the biggest reach in Africa with 38m active customers, processing more than 11bn transactions. In a bid to compete, MTN has launched the MoMo mobile money app, which includes online shopping and micro loans in partnership with Ubank. The firm hopes the products can dig away at M-Pesa’s domination and the power of traditional banks.
Mupita may try to convince the Nigerian Central Bank to further liberalise its roll-out of mobile money, but established Nigerian banks will resist extra competition and it remains to be seen whether the company can repair its damaged reputation in Lagos.
The firm is also expected to diversify in other ways. In March last year, it launched a WhatsApp channel enabling customers to buy airtime and data bundles through the messaging app, and also check their balances. In August, it launched a prepaid data campaign called MyTown Offers, which allows customers to get specific data bundles based on where they live, targeting people with vastly different economic circumstances.
Another sector MTN could target is the logistics industry, says Pater. The sector experienced strong growth during lockdown, as major African firms like Jumia and Ethiopian Airlines managed to leverage existing infrastructure to make inroads.
“All the booths they’ve got where airtime is being sold by their agents in different countries could be used as physical courier distribution points. [They could] send packages across the MTN network because they can deliver it in the middle of nowhere, and build their infrastructure around and through their agents. It’s not implausible that they will try to move themselves in all sorts of directions that will generate money for them,” Pater said.