MTN New CEO Takes Aim at Growth Engines of Mobile Data & Digital Services

Upping the ante in the provision of mobile data and digital services in these markets is just one of the tasks facing Shuter.

Rob Shuter has been CEO of MTN for close to five months and is already stirring things up at one of the emerging markets’ biggest mobile phone operator by subscribers with a call to step up the telco’s plans to win more mobile data and digital services customers.

“In fact, if you look at this big growth engines of data and digital services, I think MTN already made a good start,” declared Shuter during the interim results presentation at the company’s headquarters in Fairlands.

In the six months to end-June, MTN recorded a 9.1% rise in data users putting its total customers to 122,7 million. While active customers are sitting at 72 million.

Arguing that mobile data and digital services offers a huge opportunity for growth for MTN, Shuter says: “We are well placed to leverage the opportunity. I think what’s also encouraging is the progress in mobile money services.”

The operator added 2.7 million active mobile money customers in the six months to end-June, pushing its total users to 17.9 million.

In June 17, MTN processed 117 million mobile money transactions across its 14 markets offering the service, which translated into 4 000 transactions a minute and total value of transactions was $4 billion, according to Shuter.

MTN reckons that Africa and the Middle East remain among the world’s key growth regions over the medium to long term. As the prospects for telecommunications are closely aligned to this growth trajectory, the company said: “we see a number of opportunities and believe that MTN is well placed to benefit given our unique position in the markets in which we operate”.

To that end, MTN has made projections for expected growth in data and digital services across its 22 markets, which include countries such as Nigeria, Iran, Uganda, Ghana, Cameroon, and Ivory Coast, etc.

Africa and Middle East biggest mobile phone operator by subscribers also estimate that population is going to increase by 45 million to 700 million by 2020 across its 22 markets.

In the same period, the telco projects that data subscribers are going to increase by 200 million to 500 million across its markets. Furthermore, MTN sees digital subscribers increasing by 150 million to 500 million by 2020.

SOURCE: IHS World Market Monitor; EIU; WCIS; OVUM; Delta Partners analysis; Kable analysis; McKinsey analysis and MTN analysis

“The real question is what will be the role of operators, companies like MTN in that digital services system in these developing markets,” ask Shuter.

Upping the ante in the provision of mobile data and digital services in these markets is just one of the tasks facing Shuter, who replaced interim executive chairman Phuthuma Nhleko after the departure of CEO Sifiso Dabengwa during the Nigerian debacle.

Shuter is at the helm of MTN at a time of considerable operational challenges at Africa and Middle East largest mobile phone operator by subscribers.

Furthermore, he need to engage with the Nigerian authorities, who seem to be always having something up in their sleeves to rock the MTN’s boat.

For now, Shuter believes that MTN should rearrange itself and took advantage of opportunities offered by mobile data and digital services in its 22 markets.

Below see predicted revenue pools across MTN markets in 2020

Key drivers for growth (Image Credit: MTN Results Presentation)

In the consumer space, Shuter believes that both mobile data and digital services are big growth pools.

“What’s also critical is how we are going to arrange ourselves to leverage and take advantage of that opportunity,” he added.

In addressing the R210 billion enterprise market by 2020 in its geographies, Shuter reckons that its critical for MTN to build its enterprise business from a foundation of connectivity.

“It’s a little bit like going back to our roots, leverage our scale and infrastructure. We put ICT services as an added-on service. We have a strong foundation in connectivity.”

He regards the wholesale market predicted to grow to R30 billion in the next four years in MTN’s 22 markets as a “small revenue pool”. He added: “The key thing there, we have a lot of infrastructure and we have to make sure that we organise ourselves to take advantage of that opportunity.”

In tackling mobile data and digital services, MTN is counting on its pole position of being a number one operator in 14 markets of its 22 addressable markets across Africa and the Middle East.

Shuter sees mobile data and digital services as growth engines for MTN.

The Telco in Nigeria recorded a 22,9% rise in mobile money services users to 1,9 million in the first half of 2017. In Iran, MTN recorded a 3% rise in customers to 49 million, supported by attractive data bundles and a superior quality 3G and 4G network resulting in data revenue jumping by 67,7%. While, digital revenue increased by 3,7%, supported by an increase in local content offers.

This translated into R13.9 billion in data revenue, reflecting a 31.9% rise in the first half of the year, supported by the improved quality and capacity of its data networks in key markets.

“We will continue to leverage our scale and enhance our competitive position, benefiting from favourable demographic growth (that will mitigate expected future declines in voice revenue), low data penetration in our markets and the unique opportunity we have to provide our customers with a wide range of digital services across our operations,” said Shuter.

MTN is also shifting into providing superior customer experience and competitive data networks to entice more data users and mobile financial services customers.

The company said on Thursday that it will support the increasing demand for data and digital services by investing more on its network.

“We have reduced our capex guidance for 2017 to R30 billion from previous guidance of R34,8 billion. We expect to accelerate expenditure in the second half and meet the revised capex guidance for the full year,” said Shuter.

To accelerate the telco’s move to retain and win more customers in its 22 markets, MTN is planning to improve churn reductions in its big markets of South Africa, Nigeria, Iran, Uganda, Ghana, Cameroon, and Ivory Coast.

The churn rate, also known as the rate of attrition, is the percentage of subscribers to a service who discontinue their subscriptions to that service within a given time to some other operators. The survival of any business is based on its ability to retain customers.

The firm is aiming to reduce churn by continuing to improve its customer experience and increase its market share where it is not number one or two.

Clearly, Shuter’s strategy is acceleration of MTN plans into mobile data and digital services, not change.

The ambition is to continue to provide a great customer experience.

Shuter took a dig at MTN’s rival and said: “MTN is not about this kind of nuclear arms race to have the fastest 4G download speed in a particular place. It’s about the customer experience of the data session. You optimise your network in a different way, depending on whether you are chasing a headline or you really worried about the customer app experience. Let’s be honest, most of our data experience in smartphones is in an app, we are in YouTube, browsing in Google and downloading emails.”


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