MTN Nigeria, the largest mobile telecommunication firm in the country has reported a 23% rise in its FinTech revenue. This was confirmed by the company CEO, Freddie Moolman in the company’s notes to the results.
Higher revenues: MTN reported a record N1.169 trillion in revenues for the year ended December 2019 up 12.5% year on year. Profit for the period under review was N202.1 billion up 38.7% year on year. The blistering result was backed by revenue growth across its voice and data services.
According to the Moolman, “voice revenue growth remained healthy at 8.4% and accounted for 72% of service revenue” as Nigerians continue to rely on GSM to contact loved ones and contract businesses. “Voice traffic increased by 7.6%, supporting revenue growth” he continued.
MTN has also recorded an increase in data revenue which it ascribed to “greater population coverage, a revamp of our data portfolio and initiatives to drive 4G device penetration” adding about N219.3 billion in revenues only. Data contributed 18.8 to service revenue.
On FinTech the MD/CEO revealed the division’s revenue growth was 23.3% “supported by increased adoption of MTN Xtratime our airtime lending service.” MTN does not disclose revenue from FInTech separately and captures it only as part of Value Added Services (VAS).
The company VAS business rose from N32.2 billion to N37.1 billion and includes airtime lending and mobile money (Fintech), subscriber identification module (SIM) back up services and voice-based services. According to Moolman, MTN launched a super agent service in August which helped increase their network of agents to about 108,000. He also said “the Agent network served almost one million customers in the first four months of operation” just as it focusses on further expansions.
Doubles down on FinTech: MTN also revealed plans to widen its FinTech service offering “from basic transfer service and airtime/data sales to a more extensive bouquet, including cash deposit and withdrawal services, bill payments and facilitating -e-commerce” it concluded.
MTN’s foray into the FinTech space has often been viewed as a game-changer in a very competitive and dynamic FinTech space. With its huge balance sheet and brand power, the company has a large cash pile that it can throw into space.
Competition: Several feelers from rival commercial banks suggest the banks have stifled MTN’s entrance into the challenger banking space as they believe they do not have an equal playing field. For example, MTN’s technological assets give it more advantages and access to customers through mobile while banks are still expected to retain physical branches increasing its cost of operations. Nigerian Banks are also strictly regulated compared to other FinTech players who are allowed to innovate and create products without much regulation.
In an interview last year (April), Fidelity Bank CEO, Nnamdi Okonkwo made this point clear when he said,
“You know it has been a prolonged push by the telecommunications companies to come into the banking space. We don’t have a problem with that. Let them be subjected to the same regulatory conditions that we have because you are talking about depositors’ money. So, once all of us are subject to regulatory control, we will all do banking together. I think the sky is big enough and as banks, we are not sleeping, that is why you see some of us deepening our digital platforms.”