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Voice calls not dead - MTN CEO
Mr Wim Vanhelleputte, MTN Uganda’s CEO gestures during an interview. Photo by Michael Kakumirizi
What you need to know:
- Telecommunications provider MTN Uganda registered a drop in profitability from Shs229b to Shs177b in 2015.
- The drop in profitability was also attributed to less growth in revenue especially from the voice segment of the company which contributes almost 67 per cent of the income of the telecom.
- Revenue from voice calls dropped to Shs883.2 billion from Shs905.6 billion in 2014.
- Prosper magazine’s Jonathan Adengo spoke to Mr Wim Vanhelleputte, MTN Uganda’s CEO, about the challenges, new developments in Uganda’s telecom industry and his plans for MTN Uganda. Below are the excerpts:-
What key areas do you seek to address during your tenure at MTN Uganda?
The main thing that we have to address is to be able to offer new digital services to our customers. The telecom sector today is not the same as it was five or 10 years ago. The world has evolved, there are mobile financial services and there is also a range of other digital services that we can offer. We are keenly following the trend of what is happening in East Africa. We are part of a big group that has presence in 22 countries in Africa and the Middle East.
I will also follow and implement the big group strategies and what is happening in the telecommunications space in East Africa. We are also moving out of the traditional voice which five to 10 years back was dominating our telecoms. Today, it is more about data and digital financial services. We started that already several years ago and the big task ahead is to push that forward to the next level.
The voice segment of the market is making a decline in terms of income yet it is also the largest contributor of income for most telecoms. Do you think the era of voice is almost over?
Voice remains very important for us although as a percentage of the total revenue incomes, it is going down because the others are growing faster. As a percentage of the total, we’re reducing slightly on the voice. However, it remains the most important contributor in terms of our revenue stream. Voice is not dead. It is being supplemented by a whole bunch of services and revenues that is coming in for us but it is going down.
There is still a long way because people will continue to talk to each other. Although sending messages and other communication channels have become a substitute for voice, voice in whatever form will not be replaced just by sending texts. So, voice remains a very important area of our revenue income.
Where areas of diversification can generate as much income as voice?
The areas of diversification that can supplement the other revenue flows are the mobile financial services. But we are not a bank but a channel that can facilitate payment.
When you compare Uganda with Kenya, Mpesa is a world leader in mobile money so we still have a gap to close compared to what is happening in Kenya. One such area is the merchant payments where you can be able to use your mobile money account to pay for your taxi fare or even pay for goods. It is one area that we are going to explore.
Recently, mobile money evolved from being just a transactional platform to a savings and loan platform. MTN calls it Mokash, What role does MTN play in this?
We recently launched a service that emphasises the importance of mobile financial services while at the same time stating that we are not a bank. We are an in between our customers and the Commercial Bank of Africa (CBA) which is the bank.
They lend the money and keep the savings and deposits from the customers. Customers have access to borrow money and save it with the bank using MTN as a channel. We charge a small facilitation fee that allows people to borrow small amounts of money for a short period of time to allow them maintain their businesses. It is an enabler for financial inclusion and small-scale economic development allowing people access to some funding without depositing security. We are not in the business of money lenders down town.
The bank runs a script to estimate what credit limit they can lend. It is really facilitation, allowing customers to a certain amount of credit based on their history as a mobile money customer.
Aside from promoting financial inclusion, the one-off charge is considered high because it is above the annual benchmark rate for banks. The concern is that the 9 per cent charged is exploitative since, if it is annualised, it makes the rate 108 per cent. What is your take on this?
This product is not for people to borrow for the long-term borrowing. It is short-term borrowing which enables people to have instant access to a certain amount without any collateral. As a bank, CBA with us as partners are taking a risk. That nine per cent that we charge has to cover the 4 to 5 per cent of the amount that is not going to be paid back. From statistics, between 4 to 5 per cent of the loans do not get paid back.
So, it is like a health insurance; everybody has to contribute an amount to enable everybody benefit from the service. The more people re-pay back their loans, the more the interest rates will come down. Most of the loans are paid back between 10 and 15 days.
How do you plan to consolidate on the already existing dominance of MTN Uganda in the telecoms sector?
We are where we are because our customers appreciate us. So, if we are market leaders today, it means our customers are happy with our services. We shall continue working hard to give the best services and the best rates possible.
Sector players continue to post mixed results with some hardly making a profit since entry on the Ugandan scene. What are the next growth areas for the sector?
The next growth areas are connectivity for the corporates who want more specialised services. Telecoms like us are playing in the big market but we also provide connectivity to corporates who want a seamless connection for their servers in the UK and can have access to cloud services.
The challenge that we have is this environment which does not have the infrastructure to allow us to give the same quality of service. The big corporates have one network and want all their staff to work with one platform and you have to provide them with those services.
Some telecom consumers think the market is saturated with more players than needed. What is your view?
It is true that there are many players. One of the problems that the telecom sector is facing is the spectrum is a rare commodity. Only a number of frequencies are available and this means you have to fragment it to smaller pieces to accommodate all the players.
This implies that the big players have less frequency available proportionally to the number of customers that you have to provide the quality services. The fewer the spectrum available, the more the quality is under pressure. The real challenge for the Uganda market is to have rationalisation of the spectrum.
Away from you being the new MTN CEO, my readers would like to know who you are.
I am from Belgium originally but have been working in Africa since 1998 mainly in West Africa. I was in Senegal, Chad, Gabon, Ivory Coast. I am not a stranger to telecoms in Africa because my whole career has been in telecoms. I have been part of writing the history of wireless telecoms in Africa.
I have been in the industry and continent for more than 20 years. In 1998 when Uganda launched the first wireless telecom service, I was in Zimbabwe building towers for their wireless telephone service. The first time I came to Uganda was in 1993 and I have been in and out of the country.
I am married to a Ugandan. So somehow, this is home for me.
