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MTN Group clocks $65.7bn in aggressive fintech push

MTN Group CEO Ralph Mupita.
MTN Group CEO Ralph Mupita.

MTN Group recorded roaring fintech success in the first quarter of this year, increasing transaction volumes to 4.1 billion transactions.

Africa’s largest mobile operator released its Q1 2023 performance today, revealing it is building the ‘largest and most valuable’ fintech platform.

MTN Group CEO Ralph Mupita says that in the quarter, the operator scaled and accelerated its fintech ecosystem across its markets, driving recurring usage with a focus on new product launches to grow advanced services.

To this end, MTN Group’s overall fintech revenue grew by 17.9% year-on-year, which Mupita says reflects a ‘steady continuation’ in quarterly growth acceleration.

In the period, MTN recorded a 38.8% increase in transaction volumes to 4.1 billion transactions, with transaction value up by 64.6% to $65.7 billion.

“The overall momentum in our fintech business remained robust, with strong growth in our payments and e-commerce ecosystem, as we leveraged our strong distribution footprint,” says Mupita.

“The number of active merchants accepting Mobile Money (MoMo) payments increased by 103.3% to more than 1.6 million and the total value of MoMo merchant payments rose by 41.3% year-on-year to $3.7 billion.”

Key verticals

Providing insights into MTN Group’s key fintech verticals, Mupita says: “In Banktech, we facilitated a total loan value of $336.9 million, a 69.9% year-on-year increase, as we capitalised on our scaled mobile wallet business and customer footprint.”

The total value of remittances grew by 36.5% year-on-year to $550.4 million, in the first quarter. This, he says, was driven by “strong growth in international remittances where we have increased the number of outbound corridors to 105 (up 75.0%) and inbound partnerships to 451 (up 33.0%).”

Turning to the group’s Insurtech platform, aYo, Mupita says: “Within our strategic alliance, aYo had a decline of 3.4% year-on-year in the number of active policies, due to a shift in our approach to focus on a higher average revenue per policy and new revenue streams as well as the termination of loyalty policies in certain markets.

“Active policy growth was also impacted by platform migration and integration challenges as we shifted to a proprietary infrastructure. In the year ahead, we anticipate a return to growth in active paid policies with higher average revenue per policy and further country rollouts.”

Money matters

Turning to the group’s other key metrics in the quarter, Mupita says, MTN had solid operational execution, which saw the group service revenue increasing by 15.1%, EBITDA went 11.0%, while the company recorded EBITDA margin of 43.9% (from 45.5%).

In the quarter, group voice revenue rose by 4.7%, data revenue surged by 27.6%, while group fintech revenue bulged by 17.9%.

Addressing performance in key markets, Mupita says, MTN SA service revenue rose 1.3% and recorded EBITDA margin of 36.1% (from 39.9%).

IN MTN Group’s most lucrative market, Nigeria, the telco’s service revenue surged by 25.6% and reported EBITDA margin of 53.3% (from 54.6%).

In the period, MTN Ghana service revenue also jumped by 23.2%, while the company reported EBITDA margin of 56.3% (from 59.5%).

Commenting on the group’s performance in the quarter, Mupita says: “MTN’s resilient business model and operational execution enabled us to continue to successfully navigate difficult macroeconomic, geopolitical and regulatory conditions in Q1 2023.

“The blended inflation across our footprint remained elevated and averaged 18.5% in Q1 2023, compared to 11.5% in Q1 2022. Interest rates increased during the period as central banks acted to curb inflation.

“Higher inflation and interest rates weighed on consumers’ spending power and impacted business activity.

“Local currencies generally weakened against the dollar, and foreign exchange availability was limited in several of our key markets affecting the pace of capital expenditure and our ability to upstream dividends and management fees.”

Network resilience

In South Africa, state-controlled power cuts are affecting network availability, he says.

“There were approximately 90 days of loadshedding in Q1 2023 compared to 14 days in Q1 2022,” says Mupita.

He adds: “We commenced the rollout of our comprehensive network resilience plan in second half of the year 2022 and the work to upgrade key sites continued in Q1 2023. This included a new project, which was launched in terms of which MTN is directly driving the rollout of resilience in Johannesburg, given the urgency of the programme.

“The deployment incorporates the upgrade of rectifiers, additional battery capacity (to allow for a minimum of six hours of battery autonomy) and a mix of static and mobile generators.

“MTN SA is also piloting solar solutions on a limited number of sites. In addition, where there are higher risks of theft or vandalism, additional security solutions are being deployed, and active infrastructure changes (including replacement of copper cabling with aluminium) are being implemented.”

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