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South African mobile phone operator MTN is expanding its foothold in the country’s fast-growing fintech space. The company announced on Thursday the launch of services allowing users to send cash abroad and businesses to accept payments via an app. This move is part of a broader trend of mobile operators extending their reach into financial services across Africa, where access to traditional banking remains limited for a large portion of the population.
MTN, which relaunched its South African mobile money business in early 2020, more than three years after closing it, now boasts about 9 million registered mobile money subscribers in South Africa. According to Bradwin Roper, MTN South Africa’s Chief Financial Services Officer, the group’s primary focus is on the approximately 15% of South Africans who are still unbanked.
InvestingPro data suggests that MTN’s strong earnings should allow management to continue dividend payments (InvestingPro Tip 3). Additionally, the company’s revenue growth has been accelerating (InvestingPro Tip 1), a positive sign for investors.
The new service will enable South Africa-based mobile money users to send money in real time to recipients in over 10 African countries, provided they are also registered users of the MTN service. In addition to this, MTN has launched a virtual wallet for business owners, facilitating payments via the app or QR code. This initiative aims to reduce cash transactions in South Africa’s “spaza” shops – informal stores that are prevalent in township corners.
To further simplify transactions for these business owners, MTN has also introduced cheaper-to-rent point-of-sale devices that consolidate payments and other services like airtime purchases into one device. With approximately 80% of South Africa’s population visiting spaza shops daily and the industry valued at around 178 billion rand ($9 billion), these innovations could significantly impact local commerce.
In another move into the fintech space, MTN has launched funeral insurance that allows customers to take out cover for either six months or 12 months with just one payment, eliminating the need for monthly debit orders until death.
Earlier in the month, MTN announced a multi-year agreement with Eseye, a global IoT cellular connectivity solutions provider. Following a rigorous tendering process, the Eseye Integra IoT Platform for MNOs was selected to power next-gen MTN IoT connectivity solutions, which will see millions of IoT devices onboarded and connected. The agreement will see Eseye’s Integra solution deployed in South Africa, with goals to expand it to 18 operating companies across the continent.
Lawrence Juku, Head of IoT Solutions at MTN Business, expressed that their central goal is to be Africa’s leading digital platform, unlocking economic growth through financial and digital solutions for consumers and businesses of all sizes. “Our strategic partnership with Eseye will enable us to sell diverse IoT services such as connectivity, IoT bundles, and value-added services to help our customers meet their IoT global needs,” Juku said.
InvestingPro Tips also highlight that MTN is a prominent player in the Wireless Telecommunication Services industry (InvestingPro Tip 11) and its stockholders receive high returns on book equity (InvestingPro Tip 12). For more detailed insights and tips, consider subscribing to InvestingPro’s premium service here.
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