Initially, mobile network operators (MNOs) introduced mobile money initiatives to reduce the costs of distributing airtime and customer churn, though recently we have started to see an increase in MNOs revenues from mobile money transactions. Potential growth of mobile money deployments is widely accepted, but there has been a lot of debate surrounding profitability, an area I discussed in my last article. Whilst mobile money deployments have made significant inroads in developing countries only a few MNOs have reported double digit contributions to their overall revenue. Today, I will try to answer the following question: is there really any money in mobile money?
MNO-led mobile money deployments build their business case based on direct revenues and indirect revenues (savings). Let’s take a look at each of these scenarios:
There has been mixed success with regards to generating direct revenues from mobile money. Nonetheless, we saw that in June 2013, 8 of the more mature mobile money services generated USD 40.5 million between them, demonstrating that mobile money can be a big source of direct revenues for MNOs. A closer look at Vodacom Tanzania shows that they made significant progress in 2013 and saw M-PESA’s contribution to the company’s total revenues increase from 12.6% in September 2012 to 18.7% in September 2013. Other operators such as Millicom (Tigo) and MTN have started to publish growth in revenues from mobile financial services as well. In our sample, in 2013, 5 operators reported that mobile money revenues had contributed to over 5% of their total revenue.
What about indirect revenues?
Today in many markets, MNOs have launched multiple mobile money services and to remain competitive they have to find innovative ways of offering compelling services that give users a reason to stay with them. MNOs have played with price points to entice customers but this has had mixed results. Savings from airtime distribution on the other hand, has become a bigger carrot for operators. In our survey, we found that 10 MNOs within our sample reported selling more than 10% of their airtime via mobile money, totalling USD 19 million in June 2013.
There is a clear correlation between MNOs who have achieved scale (over 1m active 90 day accounts) and those that have reported significant revenues from mobile money. Unfortunately, the vast majority have yet to reach scale and as a result, revenues from mobile money remain a two-tier landscape.
(article by GSMA MMU)