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MTN delves into insurance business, eyes R270bn in three years

By News Express on 10/07/2019

Views: 320

Africa’s largest mobile operator, MTN, is eyeing R270bn in revenue in the next three years through a plan to offer life insurance products in partnership with Sanlam, the JSE’s biggest insurer by market capitalisation.

The two listed companies said on Tuesday they will be working together to target people who do not have insurance as MTN tries to grow its financial services revenue and Sanlam looks to expand into Africa.

MTN group CFO Ralph Mupita said MTN had identified an opportunity for R90bn in revenue each year for the next three years across their markets.

He said the companies are partnering to leverage Sanlam’s financial services capabilities and capital base while taking advantage of MTN’s significant distribution network with 29-million subscribers in SA.

Specific details are yet to be given about the products to be offered by MTN and Sanlam, as well as how they will work, their costs, time frame and how the revenue will be split.

MTN has been on a strong push in recent years to diversify its business, pursuing new revenue streams in mobile data, enterprise ICT services, wholesale network services, fintech and digital services.

The last few years have seen the rise of fintech on the continent, most famously with Safaricom’s Mpesa. SA banks have entered the fray with FNB’s eBucks offering, Standard Bank with Snapscan, and new digital players like Discovery and Tyme.

The big opportunity is mobile data and mobile money in Africa given relatively low fixed-line and formal banking penetration in most markets, Peter Takaendesa, portfolio manager at Mergence Investment Managers, said.

Mupita said 6% of MTN’s services revenue comes from fintech, but the company’s aim is to get this up to 15% across the group.

MTN has financial services products in 14 of its 21 markets and aims to add another four. ,

Mupita added that fintech was much less capital intensive than their voice and data business.

Sanlam group CEO Ian Kirk said Sanlam had invested a lot in “insure tech” and sees this partnership as a good way to expand its footprint, starting in SA and moving into the rest of Africa.

Kirk said MTN’s dominance on the continent is what made the partnership attractive.

This comes as a competitor, Liberty Group, is scaling back its Africa business to focus on SA to regain lost market share locally.

With the ever-changing disruption to businesses brought on by technology, Kirk said Sanlam had to evolve the way it operates to keep up with the changing times and attract new clients.

Felix Kamenga, MTN SA chief officer for mobile financial services, said the partnership’s first life insurance product will be delivered in the fourth quarter of 2019 with a “digital twist”.

The companies plan to launch the product in SA first before moving into other markets. Funeral cover will also be offered.

Mupita, a 20-year insurance industry veteran and former CEO of Old Mutual’s emerging markets unit, said he has been personally involved with the product’s development.

Kamenga said MTN planned to target mainly “mobile savvy” youth and young adults.

The telecoms sector is in transition, says Takaendesa, but it is still too early to tell if financial services will give operators the revenue growth needed in the face of a declining voice business. (Business Day SA)

Source News Express

Posted 10/07/2019 12:27:55 PM





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