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It’s all go for MoMo — MTN’s mobile money service is becoming a serious business

It’s all go for MoMo — MTN’s mobile money service is becoming a serious business
Ray Mahlaka
By Ray Mahlaka
25 Aug 2024
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MTN’s mobile money business is becoming a serious component of revenue generation for the entire telecommunications group.

In just five years, MTN has rapidly built a mobile money transfer service that has become larger than its traditional telecommunications offering as far as the South African market is concerned.

This is in terms of the number of active users MTN has garnered for MoMo (short for mobile money) compared with the number of South African customers who use its traditional services such as voice and data.

In August 2019, MTN ramped up the launch of MoMo in countries such as Nigeria, Uganda and Ghana, targeting customers who don’t have access to formal banking services. MoMo allows users to store, send and receive money using phones.

MTN’s financial technology business is driven by the MoMo service, a competitor to M-Pesa, which is operated by Vodacom and Safaricom.

MoMo mainly serves customers in the rest of Africa and not in South Africa, which has more sophisticated formal banking services and better access to them.

MTN’s investments in MoMo are paying off as the business is flying. For the six months to the end of June 2024, MoMo grew the number of customers who actively use the service to 66 million, largely driven by growth in Ghana, Uganda and Rwanda.

The level of growth in customer numbers at MTN’s South Africa operations (including its voice and mobile data services) doesn’t come close to MoMo’s, with the former’s growing by 4.7% versus Momo’s 9.1%.

MoMo has become so popular that it boosted MTN’s fintech business, which had an overall 18% increase in transaction volumes to 9.7 billion, valued at $146.6-billion.

Read more: MTN makes giant mobile money strides in the rest of Africa

MTN’s mobile money business is becoming a serious component of revenue generation for the entire telecommunications group. However, voice and data services are still a big revenue generator for MTN, not only in South Africa, but also in other regions in which it operates.

Expanding MoMo service offerings


MTN wants to use MoMo to push into the fintech arena, diversifying from its traditional voice business, which is in decline. This trend of decline is also being observed at other telecommunications companies in South Africa and elsewhere.

MTN has a goal of generating between 20% and 30% of its group revenue over the medium term from fintech services. It now generates 12% from it.

MTN Group chief executive Ralph Mupita said the uptake of its MoMo service could provide the foundation for the company to offer consumers a full range of fintech services beyond mobile money transfers to include taking deposits and offering insurance cover and term loans.

MTN wants to use its telecommunications infrastructure to become a de facto bank. It wants to do this mainly in Nigeria where the MoMo take-up has been strong, garnering more than five million active users.

To launch a full suite of banking services (including lending to consumers) in Nigeria, MTN required a final licence from the country’s financial regulator. In 2022, the company was granted a licence, which market watchers said would be a game changer because it would compete with Vodacom and Safaricom in the rest of Africa.

Nigeria has a huge user base and a large portion of its population do not use formal banking services, which creates big opportunities in the fintech space for telecommunications companies.

Victor Mupunga, head of research at Old Mutual Wealth, said MTN’s newly granted licence was “a catalyst that will increase MTN’s revenue contribution from this faster-growing segment [fintech] of the market”.

“Management’s targets, which seem reasonable to us, include growing the fintech segment within the range of high 20% to low 30% over the medium term,” he said.

Nigeria is a tough market for MTN, as seen in the devaluation of the naira, which has negatively affected the company’s financial situation. MTN posted a financial loss after tax of R9.67-billion during the six months ending June 2024, compared with R4.43-billion profit a year earlier. This is its first loss since 2016. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.

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