MTN eyes e-commerce to grow revenue

MTN looking to tap into Africa's smartphone usage. (Shutterstock)
MTN looking to tap into Africa's smartphone usage. (Shutterstock)
Johannesburg - MTN, Africa’s largest mobile phone group, is betting on rising smartphone adoption and usage to spur internet shopping in the continent as part of its plans to diversify revenue streams.

MTN, which has operations in 22 countries in Africa and the Middle East, has 38.5 million smartphones on its network as at the end of June 2014. This represents a 31.6% rise from the same period in 2013.

“The launch of our own Steppa smartphone contributed to the availability of and access to affordable data-enabled devices,” the company said on Thursday.

As part of its growth plans, MTN has finalised the acquisition of a 33.3% stake of Africa Internet Holding (AIH) - a joint venture between Rocket Internet and Millicom International Cellular - to develop online ventures across the fast growing internet markets of Africa and tap into the massive consumer boom.

MTN is planning to invest about €168m over the next two to four years into AIH.

“The market we operate in, e-commerce penetration is still extremely low and the little we have seen in working with this joint venture (AIH) is that there is quite a huge opportunity,” Sifiso Dabengwa, MTN Group CEO, said at a media briefing on Thursday.

He added that the company sees cross selling between its mobile and e-commerce business.

Already MTN South Africa has explored opportunities through this partnership with local online fashion retailer Zando.co.za, which is part of the Africa Internet Holding. Last month, MTN South Africa exclusively gave its customers up to 80% off selected international and local fashion brands from Zando. The offer was exclusively available to MTN customers from 24 – 27 July 2014.

MTN customers across the continent also have access to AIH’s Jumia, which is the largest e-commerce mall in Africa with over 100 000 unique visitors a day, buying everything from Fashion to Phones.

Buys an e-commerce business in Brazil

While MTN seeks to play a big role in the e-commerce space it is already attracting more data users on its network. The group had 88.5 million data users as at 30 June 2014, representing a 7.3% rise compared to 2013.

This is an indication that a move into e-commerce could help MTN migrate its users away from flagging normal voice usage.

To intensify its growth into e-commerce platforms, MTN has bought an interest in Bidu, an online insurance price comparison and brokerage provider in Brazil, through the venture capital fund, Amadeus Digital Prosperity Fund IV.  

However, African e-commerce is still at an early stage in the continent.

In most part of the African continent there are few shopping centres and with heavy traffic making it difficult to reach available malls, e-commerce could be a big winner and this could be fuelled by growing middle class and availability of mobile phones and other smart devices such as tablets.

Meanwhile, MTN Mobile Money customers rose 24.3% to 18.4 million as at 30 June 2014 and the company said this was an increasingly important part of its service offering.

- Fin24

*Gugu Lourie is the editor of techfinancials.co.za. Follow him @LourieGugu.

ZAR/USD
17.00
(-0.09)
ZAR/GBP
21.24
(-0.12)
ZAR/EUR
19.14
(-0.13)
ZAR/AUD
11.81
(-0.13)
ZAR/JPY
0.16
(-0.20)
Gold
1774.74
(+0.03)
Silver
18.05
(+0.01)
Platinum
808.00
(+0.25)
Brent Crude
42.78
(-0.79)
Palladium
1914.01
(+0.62)
All Share
54521.90
(-0.17)
Top 40
50179.89
(-0.26)
Financial 15
10150.02
(-0.64)
Industrial 25
76554.73
(+0.52)
Resource 10
50138.02
(-1.24)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1587 votes
I am taking a hit, but should be able to recover in the next year
23% - 2076 votes
My finances have been devastated
34% - 3098 votes
It's still too early to know what the full effect will be
25% - 2246 votes
Vote