Telecoms firms pin hopes on mobile banking

By Londiwe Buthelezi Time of article published Nov 13, 2013

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Johannesburg - Cellular operators want to open up their networks for more banking transactions as they have pinned their hopes on mobile money to grow revenues in the future.

According to Fredrik Jejdling, Ericsson’s sub-Saharan African regional head, the most downloaded mobile apps in Africa now were banking apps. Social networks were the second most downloaded.

Discussing the source of their revenue growth in the next decade at the Africa Com telecoms conference yesterday, the operators said that as their traditional voice revenue had come under pressure, data revenues had exploded over the past two years.

“Clearly data is the future growth… Mobile operators need to allow transactions to be made through their networks to embrace this future,” Vodacom chief operating officer Romeo Kumalo said.

When Vodacom published its results on Monday, the company reported that in South Africa, average data usage per smartphone increased 79 percent and its overall data traffic grew by more than 80 percent from last year.

MTN, which said last month that data revenue increased by 34.7 percent year on year, has adopted a strategy that makes data and mobile money a key focus for the group.

Kumalo said there had been an explosion in mobile money transactions and 5.5 million people were now using M-Pesa in Tanzania.

M-Pesa is a cellphone-based money transfer and microfinance service. Users only need a cellphone number to send money to another user, receive money or withdraw cash.

“More than $1 billion (R10.3bn) is moved on M-Pesa a month in Tanzania. Looking at the success of M-Pesa in both Kenya and Tanzania, I’m excited about what more information and communications technology can do,” Kumalo said.

Brett St Clair, Google’s head of new products for sub-Saharan Africa, said consumers wanted to transact using every possible mechanism. He said cellular operators that added value for their customers would see more people willing to pay for their data services.

“The next 5 billion [people] to come online will be using mobile devices. How do we find the value for consumers to see it is worth being online?” St Clair challenged operators.

Marc Rennard, the international executive vice-president for Africa, the Middle East and Asia at cellular network operator Orange, said people around the world wanted more services and cellular operators could not continue to just be carriers.

“Added service is where revenues are going to come from,” Rennard said. “Growth will come from data, mobile money, big data. But at the end of the day we need to manage [a] profitable role.”

He said operators needed to engage the governments and regulatory bodies to fight excessive tax and excessive licensing fees, which were affecting their profitability.

José Dos Santos, the chief commercial officer of Cell C, said while retail prices of data continued to come down, operators’ margins were very tight.

To solve this, he said, South Africa needed to get national broadband sorted out. If the operators’ input costs continued to be high, data prices would not fall even with higher internet speeds in future.

High data costs hamper internet access for many people in remote areas of Africa.

St Clair said, for instance, that whenever there was a price war that resulted in a drop in the price for data services, Google saw an instant increase in the use of YouTube, meaning that the market was there waiting for accessibility of data services.

Howard Charney, the senior vice-president at telecoms firm Cisco, said emerging markets could add 1.4 percentage points to gross domestic product growth whenever their internet penetration increased by 10 percentage points. - Business Report

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