MTN Counts On Former Bankers To Grow Its Business On Mobile Money
MTN Group, Africa’s largest telecoms operator, is turning to banking industry veterans to help it help revive it slowing profits by increasing the company’s revenue from it mobile money business.
The group, which has had several changes in top management in recent weeks, has head hunted a new CEO and Group Head of Mergers, Acquisition and Strategy from the banking world.
In June, MTN appointed an outsider, the current European head of Vodafone and a former banker, Rob Shuter as the new chief executive officer and Stephen Van Coller, a former Barclays Africa investment banking chief, as the head of merger, acquisition and strategy.
Shuter, who is expected to take his new position by July 2017, has been brought in to boost profit at the mobile phone group after a $1.7 billion fine in Nigeria, by persuading its 200-million clients to use their handsets to store money and pay bills, BDlive reported.
Coller is expected take up his new role in October.
Tough competition in the telecoms sectors and increased regulation in the markets MTN operates has made it difficult for the company to grow its profitability from calls and other basic phone services.
The company is now looking to borrow a leaf from it African rival Safaricom, Kenya’s leading mobile operator, whose mobile money business M-Pesa helped offset falling revenue from basic telecoms and convinced some executive and investors that financial services is the industry’s next growth area, Reuters reported.
Investors in MTN are hoping Shuter and Coller will use their banking experience to shake off the company’s reputation as a stock with limited potential for growth and chart a way towards becoming a big player in financial services.
The company came into some serious headwinds in the last quarter of 2015 after it was slapped with a record $5.2 billion fine by the Nigeria Communication Commission (NCC) for failing to comply with a unregistered SIM card switch off deadline.
It said early last month that it had reached an agreement with the NCC to pay $1.7 billion over the next three years, effectively clearing a dark cloud that was hanging over the company’s unit in country.
Some analysts however still expect the company to struggle in growing its profitability.
In May, James Chanos, a New York City-based short seller who’s famous for predicting Enron’s failure in the US, predicted that MTN could could struggle to grow its profits, Fortune reported.
Chanos said he had bet against the telecom company because he expected its falling profits to erase a significant part of its earnings, which according to him weren’t solid as they seemed.