MTN Rwanda has had quite an eventful year, the firm listed on the local bourse, renewed its operating license and followed through on the Connect Rwanda initiative among others. The year was not without its fair share of challenges, many of which were overcome.
The New Times’ Collins Mwai, spoke to Mitwa Ng'ambi, the Chief Executive of MTN Rwanda, where she gave insights into the year including MTN’s growth, financial position, Mobile Money, Connect Rwanda and network expansion among others;
Excerpts:
MTN Rwanda’s profits as at the end of September 2021 stood at over Rwf 19B, what were the key drivers of the performance?
The overall business grew quite well, higher than 20 per cent (year on year) as of September and compared to last year. A lot of the growth drivers are not unique to previous years. Voice grew quite well, by about 12 per cent primarily due to the growth of our customer base.
The increase in subscribers was a result of the rollout of sites to new areas in the country that were previously not covered. This year we rolled out in at least 45 areas where there was previously no network.
Mobile Money grew by more than 50 per cent, which is among the fastest growing parts of the businesses. Within Mobile Money, person to person transfers and cash out make up close to 80 per cent. Interestingly though, advanced services such as savings, loans and merchant payments grew to the tune of 10 per cent as a percentage of total revenue.
Data has grown as well where we now have over two million customers currently using our mobile internet services, this has grown from about 1.5 million subscribers at the end of last year.
This year, MTN Rwanda took up a syndicated loan of about Rwf64B from 10 local banks to meet license renewal obligations. Do you have plans to return to the market for the remaining installment of the license fees?
When we put out a request for a syndicated loan, we do not just look at the immediate need, we do cash flow projections of at least 48 months looking forward. As a business we know that the loan is sufficient to handle the license renewal and planned capital investments going into next year. At the moment, we do not foresee that we will be going back into the market for the second installment of license fees. We had communicated to our shareholders that between the syndicated loans and the cash that we hope to generate, funding will be sufficient for the second license installment.
Following the reinstatement of Momo-pay fees on merchants, there has been quite a drop in weekly values from about Rwf 5.6B in August to about Rwf 2.5B as at the end of October. How are you taking this in?
The conversation around Mobile Money and Momo-Pay has been an interesting one. Before the pandemic hit, we had an active merchant base of about 1000. In March 2020, we zero-rated transactions to encourage use of digital payments. This year, we reinstated fees after providing the service for 18 months free of charge. By August this year, we were hovering around 60,000 merchants.
From a business perspective, we always have to make sure that all players in our ecosystem are remunerated adequately. While MTN is at the forefront of Mobile Money, there are multiple stakeholders who support Mobile Money to run the way it does; for example we have distribution partners and 45,000 agents across the country among others.
It was a tough call but one that had to be made for the sustainability of the business. Even in reinstating the fees, we reduced them by half and put it at 0.5 per cent. Volumes may have declined slightly but the number of merchants has remained stable.
What’s your message to users on this?
In the last 18 months, digital payments have grown in leaps and bounds, it will be a shame to lose those gains. In 2022, there are many products coming down the line like mobile digital business platforms and advanced payment solutions with very many interesting partners. Revenue generated from these services is ploughed back in form of investments to make sure the ecosystem is still innovating and growing. We are looking at lots of value additions to enrich the ecosystem to the benefit of our customers.
Network quality has been a source of complaints from both clients and the regulator, how did we get here? Any chance it could be addressed soon?
When talking about the impact of Covid-19, we tend to focus more on negative revenue impact. However, what we saw as a Telco with the onset of the pandemic, was a dramatic shift in customer voice and data traffic patterns. This was not unique to MTN nor Rwanda, but a dramatic shift experienced across most Telcos around the world.
In some residential areas, we saw voice and data traffic jump by 100 per cent with the shift to working and learning from home. The reality is that there was a time when our rollout was trailing slightly behind this demand. This was the source of complaints from our customers, which we acknowledge and appreciate. Additionally, the population coverage of our network is about 98%, with some areas remaining uncovered. Our job over the last year and a half has been to quickly evolve and expand to serve our customers during this challenging time. We have also had to re-think our investment profile where our technology investments in 2021 has grown to $32 million from an average of $22 million in previous years. This technology investment will rise to about $40 million in 2022.
The technology investments in 2022 will include a rollout of at least 200 network sites, compared to 140 rolled out in 2021 and 80 in 2020. When we talk about the number of sites and expansion, I understand that it is not easy to relate this to customer experience. Very simply, customers want to be able to pick up their phones and make calls without interruption, services that have been stabilized a great deal in the last few months. As we look to expand further we urge out esteemed customers to bear with us as all planned investments are rolled out.
In partnership with the government and Rwandans of all walks of life, MTN Rwanda has been running the Connect Rwanda initiative to drive smartphone ownership. What has been the impact realized?
When we kicked-off Connect Rwanda in 2019, it was borne out of a realization that smartphone penetration is low and if we keep doing what we have always done, not much will change.
Within the first three months of the campaign, we had gotten about 44,000 smartphone pledges, then Covid hit. In terms of impact, about 27,000 pledges were honored and delivered.
I take a lot of pride knowing that 27000 people today have a smartphone that they didn’t have before. There were concerns that the beneficiaries would not be able to use them or would sell them, however we were deliberate about trying to raise digital awareness using a fleet of digital ambassadors.
When we look at the activity level of the distributed devices, we see that more than 90 per cent of them are still active in their use. We are encouraged by the impact of the initiative and the even bigger lesson in the power of involving every single institution and individual behind a common cause.
20 per cent smartphone penetration is quite low given the country’s digital ambitions, no?
I have had this conversation with many industry leaders and there is an increasing understanding that it is time for a digital revolution. This revolution will be slowed if we do not join hands to drive smartphone penetration. The picture that I try to paint is that while it’s great that we are all building applications in our various industries, if smartphone penetration remains low the audience to which you can sell and onboard the applications is limited. It is something that we all need to pay attention to for the sustainability of all our businesses that are undergoing digital transformation.
What are other alternative approaches that can be employed to drive up smartphone ownership?
I just came back from a regional tour and that is something I asked in every market stop and the answer is unanimously the same, which is affordability. The out-of-pocket upfront price of Rwf 30,000- Rwf 50,000 is not something that many can afford. We do think that a sustainable solution lies in bringing down the initial purchase price of the device but we also understand that smartphone manufacture costs are still high. Where we see an opportunity is in device financing models where customers can pay small installments over time - I do think that the solution lies in a model such as this.
Apart from smartphones, what is the overall company focus in 2022?
In 2022 we continue with the execution of our Ambition 2025 strategy. As I mentioned earlier, delivering a seamless network experience remains our first priority. This you will see not only in the form of mobile network expansion, but fibre to the home too. Innovating and expanding our apps and platforms is also key for 2022. Beyond MoMo and Ayoba, we look to build more platforms. ESG (Environment, Social and Governance) matters also come front and center in 2022 and beyond as we look to serve our communities better while we continue to deliver value to our shareholders.
Mitwa Ng'ambi, the Chief Executive of MTN Rwanda hands smart phone to residents during Connect Rwanda campaign (Courtesy)