MTN focuses on innovation to grow its profitability
Monday June 10 2019
MTN’s Average Revenue Per User currently stands at 2$ per month.Photo | Cyril NDEGEYA
MTN Rwanda faces increasing backlash from customers about poor services and threats from Over The Top platforms, which are cannibalising voice revenues.
The firm is looking beyond its Rwf7.7 billion profit to focus on improving its network and reducing data and voice prices.
The operator bounced back from a Rwf8.5 billion loss in 2017, largely due to a Rwf15.5 billion penalty imposed by RURA, to record a 21.6 per cent growth in revenues to Rwf102.8 billion for 2018.
The company’s earnings before interest, tax, depreciation and amortisation stood at Rwf30.1 billion at the end of December 2018, registering a net profit of Rwf7.7 billion.
Bart Hofker, MTN CEO said that although they are seeing a growth in revenues across all their offerings — such as a 40 per cent growth in mobile money revenues in the first quarter of 2019 — there is a need for more innovations for MTN to make it in the market.
“Voice will continue to decline and will be overtaken by data going forward and the effect of OTT platforms is obvious,” he said.
Over the past few years, OTT platforms such as WhatsApp, Skype, Facebook and others have been innovating and improving their technologies.
To stay afloat, MTN and its sole competitor Airtel-Tigo have had to come up with promotions to keep them afloat.
MTN’s average revenue per user currently stands at $2 per month, and this is largely due to promotional voice packages like Irekure, Superpack across all networks and an even cheaper option to call MTN subscribers, which could be behind the 19.1 per cent growth in voice.
Mr Hofker said customers are generally happy with the promotions especially Irekure, but he noted that lack of disposable income among Rwandans remains a risk for the operator.
The company invested $20 million in a network upgrade to enhance 3G coverage, but it seems not everything was fixed.
Although MTN is still the market leader with a 52 per cent market share, Airtel-Tigo with a 48 per cent stake is giving them stiff competition across voice and data in speed and affordability.