MTN Group will apply for a mobile banking licence in Nigeria and plans to launch the service there next year, its CEO said on Tuesday, further embedding the South African telecoms company in its biggest but increasingly problematic market.
Nigeria announced last month that it would allow telecom companies to provide banking services, aiming to give millions of Nigerians without bank accounts access to so-called mobile money services, a policy that has been very successful in Kenya.
MTN runs Nigeria’s biggest mobile phone network serving 56 million people, but it is also involved in a dispute with the authorities after the central bank said it illegally transferred $8.1 billion overseas.
Separately, it has been slapped with a $2 billion Nigerian tax bill and whether those issues could influence how quickly MTN secures a licence remains to be seen.
“We will be applying for a payment service banking licence in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019,” Rob Shuter told a telecoms conference in Cape Town.
Rivals Airtel, a unit of India’s Bharti Airtel, as well as privately owned Globacom and 9mobile, are also expected to apply for licences.
The success in east Africa of M-Pesa, the mobile money unit of Kenya’s Safaricom, has convinced investors and the industry that financial services is the next growth area for the telecoms sector which is grappling with falling prices for basic services.
If granted a licence, MTN would launch the service in a country where 115 million Nigerians, or 60% of the population, does not have a bank account, according to the World Bank.
“It’s a huge opportunity for MTN,” said Byron Lotter, fund manager at Vestact, which owns shares in MTN. “The problem is they are being held hostage by this $10.1 billion demand because their business is too big to leave.”
Shuter, who has led MTN since last year, also said the company would relaunch mobile money services in South Africa, two years after canning the service. The company has also bought a music streaming business Simfy, which Shuter said was “Africa’s leading music streaming business.”
He did not give details about MTN’s plans to relaunch mobile money in South Africa, a market that has proved difficult to crack because around 80% of the population already has access to traditional bank accounts.
Separately, MTN has joined forces with China’s Unisoc, China Mobile Communications and Kaios, a mobile operating system, to manufacture affordable 3G phones with some smartphone features such as YouTube and a camera, Shuter told a press briefing at the conference.
The new devices would be launched in the first quarter of next year with an initial 10 million phones available, he said.
Shuter, who has experience in banking, is in the middle of a strategic revamp of Africa’s biggest telecoms group to hunt for returns in everything from financial services, music and video games.
Shares in the company rose 1.3% to R80.89, outpacing a broadly flat JSE Top-40 index.