Africa’s Nigeria’s leading telecoms provider, MTN Nigeria is poised to become a fintech leader with the progress it is making towards increment in the data, digital, and fintech revenue even as voice revenue growth remains tepid. The telcos recently released a financial report for the first quarter of 2021, showing strong performance despite losing 5 million customers.
It could be recalled that in August 2019, MTN launched its mobile money business, MoMo, in Nigeria. Its competitors are companies like OPay and Paga, both of which have talked up some impressive figures at different times.
OPay has claimed to have over 300,000 agents and said that in December 2020, it processed $2 billion in payments. In comparison, MoMo’s progress has been overlooked by observers and analysts.
A recent policy by the Nigerian Communications Commission (NCC) suspended the registration of new SIM cards. This suspension meant that as telecoms operators like MTN lost subscribers through churn, they could not add new customers. Active data users also declined marginally by 71,000 to 32.5 million.
Despite the decline, MTN still showed strong performance in Q1 as Profit before tax grew by 33.9% to N102.9 billion. Karl Toriola, the company’s CEO, summarised the performance perfectly, “We made good progress in the first quarter of 2021 despite the continued impact of the COVID-19 pandemic.”
As voice revenue continues to slow down, data revenue is thought to be the future for telecoms companies, and by MTN’s Q1 results, that future looks bright. Data revenue brought in around 36.4% of total revenue.
Data contributes massively because of a corresponding increase in how people are using data. MTN recorded an 86.7% increase in data traffic and a 48.5% increase in usage (MB per user) from the existing base.
MTN has expanded its 4G coverage to about 61.8% of the population but what’s more interesting is that in Q1, it added 1.2 million smartphones to its network. 47.5% of the company’s customers now use smartphones.
It is easy to see why analysts say that data revenue is the future when you consider that less than 47.5% of its customer base contributes over 35% to its total revenue. When smartphone penetration moves to the region of 70%, data revenue could grow even more significant. But data revenue isn’t the only thing that is growing, with MTN showing real promise in its fintech efforts.
In Q1, the number of MoMo agents increased by 54,000 to 449,146. The volume of transactions processed was over 24 million in the quarter, up more than four times YoY, from an active base of 4.6 million subscribers.
While the number of agents is hardly the best mark of progress since agents serve many masters, its transaction volume, which is verified by auditors, is likely to be one of the more accurate figures we will see in the space.
On the back of that, fintech revenue rose by 28.5% and MTN said that the pandemic accelerated the adoption of MoMo. Digital revenue from mobile advertising, MusicTime and instant messaging grew by 101.0% despite the fact that the number of active digital users remained flat at 2.8 million.