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Christian De Faria: An operator can’t just sell airtime anymore

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Christian De Faria, Senior VP Commercial & Innovation, MTN (Image: File photo)

“The times are changing,” Christian De Faria, Senior Vice President of Commercial & Innovation at MTN Group Limited, says in an interview with ITNewsAfrica.com. “An operator can’t only sell airtime anymore.”

“Convergence has become a reality,” De Faria continues. “Data revenue is growing quickly worldwide, and in developed markets operators have 30 – 50% of their revenue coming from data.”

Having run the gauntlet of security measures at the MTN Innovation center, I was ushered into a small boardroom with unusual statues in the corners and a view over two stories of cubicles. De Faria greeted me with a friendly handshake and we got right down to business; discussing MTN’s steady growth on the back of staggering mobile growth in the African continent.

MTN is ideally positioned to take advantage of this growth. “We have already prepared for the change of game. We started M-Money 2 years ago in 11 of our markets.” M-Money (Mobile Money) is a very important part of MTN’s strategy in Africa. Bank penetration in not as widespread in sub-Saharan Africa as it is in South Africa where most consumers have debit or credit cards. M-Money helps MTN to serve the unbanked population. While some consumers in South Africa use this product, the percentage of customers in sub-Saharan Africa with access to traditional banking institutions is very limited. M-Money allows these customers to buy airtime with their phone and to do peer-to-peer money transfer. But, far more importantly, it also creates a widespread network of merchants where they can pay for utilities, school fees or subscription fees using their mobile phones.

The M-Money application reflects MTN’s commitment to providing relevant and useful mobile applications to the African market so that people’s lives can be improved in a very real way. “MTN is delivering a better value proposition to our customers. Not everyone has access to PC and by providing very useful, basic info to the consumer via the phone, you delight the consumer. You give relevant info that the consumer needs.”

This is where MTN wants to focus in its application offerings. “We must be relevant to our market. We have to look at a segmented approach. You need to know your consumer and understand what they need. It doesn’t help us to have an app store which has 200 000 apps which our consumers don’t need and won’t use.”

MTN plans to make M-Money so user friendly and wide-spread that consumers, with time, can really use the mobile phone and M-Money platform as a current payment tool. But the potential for M-Money does not stop there. “Why not receive your pension with M-Money?” De Faria asks. It is safer than walking great distances to collect your monthly stipend, with M-Money, you can receive a direct deposit into your bank account.

Other offerings in MTN’s mobile application market include the soon-to-be-launched M-Health product, which MTN is launching in partnership with SANLAM in South Africa, and will extend into other markets with time. M-Health is an application which can provide basic health services to the customer via the mobile phone. “In lots of countries in which we operate, the health system is not as well developed as in South Africa and if you want to visit the clinic or see a doctor you have to travel a long way, or queue for a long time. We don’t want to compare ourselves to doctors, but we want to provide basic services to the customers,” De Faria said.

“Then, we have also launched M-Agri. If you are a farmer and you need to find out how much you can sell a particular crop for in a particular market, or you want to find out where you can get the best price for your produce you can use this application.”

De Faria said that MTN sees the empowerment of the consumer as a very positive thing. “This is a normal part of a country’s evolution. Regulators and consumers become stronger, we embrace these regulations, make sure everything we do is in line with the regulations in a particular country.”

“For us it is really all about segmentation and knowing your market better. Generic products are a thing of the past. Today it is not going to work, You have to know your consumer’s interests, habits, where you can reach them. In our market approximately 50% of our consumer base is below 25 years old. This segment does not have the same habits as someone who is 45 years old and already has a steady job, family etc. They meet in a different place and behave in a different way. They like music, they like dating services, and we have to look at relevant applications for each segment.” De Faria said.

Moving away from MTN’s customer focus, we discussed an issue which De Faria terms “Bit Pipe vs. Smart Pipe.” In the past, operators offered connectivity, they put a network in the ground and sold airtime, this is known as a “bit pipe”.

With the changes in the telecom market there are many actors in the sector and many of them provide apps and piggy-back on the network. They sometimes use the network and the operator doesn’t get any compensation for that use.

“Many players are trying to use the operator’s network free of charge,” De Faria said. “You can use my network but I want to have a reasonable share.”

“Or we as an operator need to provide applications where we charge for the usage. We can’t be a passive infrastructure company, we want to make sure that anyone who wants to use our network will be asked to participate. That is a smart pipe.” De Faria continues. “This is a dilemma of some players because they want to use the network and not participate. We want to protect our investment. We have started strongly, not only by providing connectivity, but providing apps which monetize our network.”

“Every operator wants to become a smart pipe.” De Faria finishes.

By Angela Meadon

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