MTN Plots Digital Revolution

From next week, MTN mobile money users will embark on a journey of a new experience following a multi-billion shilling upgrade that will see mobile money become a digital platform on which high-level financial transactions will become possible in a secure environment. Speaking to media bosses in Kampala on Sept.11, Brian Gouldie, the CEO, said the upgrade being spearheaded by Ericson and Stanbic Bank, is intended to drive the company’s digital evolution agenda into 2015 and beyond. The upgrade on the mobile money network will be carried from Sept.20-22, which will render the system inaccessible for the three days.

When it is completed, it is expected that the upgrade will lead to a seamless convergence of telecommunications and Mobile Money onto ‘one’ platform and will lead to, will make it more secure, more reliable, and easier to use hence better customer experience. Additionally, it will allow for Internet and mobile app integration especially on the popular 3G network.

The company’s mobile money upgrade is only a part of a four-pronged ‘digital evolution’ drive premised on continuous investment, delivering access to modern handsetsdevices, offering next level financial services as well as value added services and content. The plan is to ensure that mobile money more than a money transfer platform – making it a store of value, a channel for air time distribution and payments and finally for banking integration to ensure telecom, digital and financial inclusion. “Only MTN has the ability to bring this convergence in Uganda,” boasted Gouldie.

The demand for modern value added services such as entertainment, useful information, e-commerce and self services such paying taxes, utilities and mobilizing social donations are also seen as a splendid opportunity.

Indeed, MTN has found that pressures from the competition have eaten into its voice revenues hence forcing them to find alternative revenue assurance and differentiation strategies. MTN has five competitors, which include Airtel, Orange, Uganda Telecom, K2, and more recently Smart Telecom.

Uganda currently has an estimated 6.8 million Internet users half of which (3.4 million) are mobile data subscribers. However, data penetration is still very low at just 18% compared to the voice penetration rate of 45%. He said raising this rate is important as UNESCO has estimated that for every 10% increase in data penetration, developing countries could add as much as 1.3% to their GDP. Also, increasing broadband speed is seen as an important aspect of development as Ericsson has showed that doubling the speed of broadband can directly make a 0.3% impact on GDP. To date there are only about 850, 000 3G\LTE devices in use in Uganda, 500 000 of those are on the MTN network. At least 70% of data revenue comes from these 3G devices.

Despite the competition, which Gouldie described as “unsustainable,” MTN proposes to grow its investment to a higher level in 2015 to Shs 238 billion subject to Board approval. This is a substantial investment compared to the Shs 157 billion it has invested in 2014 and the Shs 138 billion it invested in 2013. Most of this investment is being allocated to 3G and LTE, state of the art IT infrastructure and value added services particularly mobile apps and self services. However, poor penetration of modern devices especially smart phones is still a key challenge as only 13% of mobile handsets are smart phones.

The majority are cheap phones that can’t offer the services being anticipated by the digital revolution strategy. Gouldie said this would require access to the correct technologies and correct frequencies so that cost of deployment can be substantially reduced, which would translate into effective reduction in prices and mass adoption. The consistent regulatory environment with clear policy and guidelines from the Uganda Communications Commission (UCC) is seen as a big positive and access to key frequency bands is being seen as critical to driving the future delivery of the digital revolution.

The price of smart phones on Android, Windows or iOS operating systems ranges from Shs 150,000 – Shs 2 million. These support cloud computing, media players, GPS navigation, App stores, Office applications, Internet connectivity via Wi-Fi – services that MTN targets in its digital evolution. This was after finding out that the basic voice, SMSMMS amp data services no longer meet their customers’ ever-changing interests, needs and life styles, which has made VAS necessary to enhance the customer’s experience and also provide for more sophisticated storage and retrieval systems.

Gouldie said it is unfortunate that Uganda has become a dumping ground for all sorts of mobile devices, which he attributed to tax waivers being implemented in some neighboring countries. In partnership with the various handset manufacturers, MTN is working on an ambitious plan to introduce affordable smart phones to its customers in a bid to improve the internet use experience. The aim is to raise penetration by 60% compared to the current 13%.

Also, MTN and other operators are calling for more support from the authorities to stop the vandalism of fuel, batteries and fibre cables.

He also stressed the need for future certainty in both regulatory environment and competitive environment, which he said is fundamental to the investment strategy. In recent years, he said competition in the industry in Uganda has not been sustainable, resulting into several operators either selling out or closing down completely.

On the cost of the Internet, which some media managers said were still high, Gouldie said the price is a function of penetration rate saying as it is scaled up the prices will eventually come down.

Source : The Independent

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