Mobile money making its mark with major groups: Millicom, MTN, Vodafone, and Orange

To understand the strategic priorities of a publicly traded company, one usually needs to look no further than their annual reports. If this is true, the 2012 annual reports from a selection of major telecom groups indicate that mobile money is garnering increasing attention from group leadership.  This year has seen an uptick in attention given to mobile money in group financial reporting, with more transparency around active customer figurers and key financial indicators specific to mobile money.  And the results are painting a picture of increasing revenue contributions and traction in select markets.

The four telecom groups represented in this blog post account for over 42 million mobile money subscribers according to their latest published figures. In comparison, the June 2012 GSMA Mobile Money Adoption Survey counted 82 million subscribers worldwide.

Recall that mobile money contributes between 1% and 5% of revenues for most “sprinters. [1]” And for four sprinters it represents at least 10% of total revenues. Telecom group financial reports confirm the financial significance of mobile money, beyond churn reduction benefits. Moreover, they highlight the relative importance of non-voice services as future revenue drivers, especially as GSM markets mature.

Millicom (Tigo) – 3.9 million active subscribers (31 December 2012)

NOTE TO READER: The Millicom figures were originally misreported in this post and have been since been amended. Also note that Millicom publishes active subscribers while most other groups publish registered subscribers.

http://gaia.world-television.com/millicom/millicom2013/download/Session3aCMD-MFS.pdf

Millicom’s 2012 annual report contains a number of bullish statements and projections around mobile financial services. Millicom says that they are “creating a blockbuster” and that “mobile financial services could be a platform that transforms entire economies.”  By 2017, Millicom projects greater than 50% MFS adoption in their GSM subscriber base with those subscribers generating $2.0 monthly MFS ARPU.

Currently mobile money generates $40 million revenue, still a modest percentage of the $4.8 billion generated across the entire business. However, the growth is impressive. In the fourth quarter mobile money was the largest contributor to their growth in Africa, generating more incremental revenue than even their mobile data business. Revenue growth since FY2011 was 322%.

Group level metrics and forecasts

  • 3.9 million active subscribers
  • $40 million revenue (1% of Millicom total); 322% YOY revenue growth
  • 8.4% current MFS penetration into GSM base
  • 2012 MFS ARPU = $0.86; forecasted 2017 MFS ARPU = $2.0
  • “MFS could be a $1bn revenue opportunity”

Key markets mentioned

Tanzania

  • 37% of customer base active users of Tigo Pesa in Q4 2012
  • Significant reduction in churn amongst MFS customers 

Paraguay

  • 24% of subscribers reached 

Rwanda

  • 22% of customers are active users as of end of December 

MTN – over 10 million subscribers (31 December 2012)

MTN offers mobile money services in 11 markets to over 10 million subscribers. While light on commentary, MTN’s annual report and press releases give figures in a few key markets including Uganda, where mobile money contributes 9% of total revenue.

MTN says that their “products and services help close the digital divide in our markets and make a positive socio-economic impact. These include MTN Mobile Money.”

Group level metrics and forecasts

  • >10 million mobile money subscribers, up by two-thirds from 2011’s 6 million 

Key markets mentioned

Uganda

  • Over 3.5 million subscribers
  • 9% contribution to revenue
  • >200m transactions in 2012

Rwanda (press release from November 2012)

  • >600k subscribers, equivalent to 20% of MTN Rwanda’s GSM subscriber base
  • $138m in transactions since launch

Nigeria

  • 9,000 agents and over 500k subscribers
  • Continued to engage with central bank in 2013 to resolve “outstanding issues around the bank-led model” 

Vodafone (Vodacom / Safaricom) [2] – over 22 million subscribers (31 March 2013)

http://www.vodacom.co.za/cs/groups/public/documents/vodacom.co.za_portal_webassets/vod-announcement-mar13new.pdf

http://www.safaricom.co.ke/images/Downloads/Resources_Downloads/FY_2013_Results_Presentation.pdf

 

Vodacom M-PESA markets covered in the report are Tanzania, South Africa and DRC which launched in the most recent quarter before it was published. Vodacom cites mobile money as one of the key sources of future international growth. The Tanzania deployment appears to have enjoyed particular success where mobile money contributes 14.1% of total revenue.

Safaricom M-PESA continues to stand alone in its scale and contribution to its operator. Over 17 million subscribers (10.5m active) deliver $1.38 ARPU and in aggregate contribute 18% of Safaricom’s revenue. Safaricom’s $1.38 mobile money ARPU grew 22% over the last year, offsetting flattening user growth due to saturation.

Group level metrics and forecasts

  • Active users up 57.5% to 4.9 million (Vodacom – Tanzania, South Africa, DRC) 

Key markets mentioned

Kenya (Safaricom)

  • 18% of Safaricom revenue (29% growth, compared to 12.6% growth in voice revenue)
  • 10.5m 30-day active users, 17.1m registered users
  • $1.38 M-PESA ARPU up 22% from last year

Tanzania (Vodacom)

  • M-PESA contributes 14.1% of revenue, up from 8.4% last year
  • 51.7% of customers actively use the service
  • $1.50 M-PESA ARPU
  • Increasing amount of airtime purchased through M-PESA

Orange – 5.6 million subscribers (February 2013)

Orange claims 5.6 million subscribers spread amongst 14 markets with fast rates of growth across a number of metrics.

Group level metrics and forecasts

  • 13 markets in Africa launched
  • 5.6 million subscribers
  • In 2012: Transaction volumes 3x growth, value transacted 4x growth, subscribers 1.7x growth

[1] “Sprinter” = MMU’s term for the world’s fastest-growing mobile money deployments

[2] Note: Vodacom Group is majority-owned by Vodafone Group which also has a significant stake in Safaricom. Vodacom Tanzania Ltd is majority owned by Vodacom Group. All use the M-PESA platform and brand, which are owned by Vodafone.

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