Innovation challenges and opportunities in emerging markets. February 2011

Transcription

1 Innovation challenges and opportunities in emerging markets February 2011

2 Agenda 1. MTN Profile 2. MTN Innovation firsts 3. The need for Innovation 4. Current Innovation Projects in MTN 5. Innovation Opportunities 6. Innovation Challenges

3 MTN Profile and geographic footprint Launched in 1994, the MTN Group Limited (MTN Group) is a multinational telecommunications group offering cellular network access and business solutions. It has mobile licences across 21 countries in Africa and the Middle East and as at the end of Sep 2010, recorded more than 134 million subscribers. MTN Group operates in three regions: South and East Africa (SEA): MTN South Africa, MTN Swaziland, MTN Zambia, MTN Uganda, MTN Rwanda and Mascom Botswana. MTN Business: SA,Kenya,Zambia,Botswana,Namibia West and Central Africa (WECA): MTN Nigeria, MTN Cameroon, MTN Congo-Brazzaville, MTN Côte d Ivoire, MTN Benin, MTN Ghana, MTN Guinea-Bissau, MTN Guinea Conakry and Lonestar Liberia. Middle East and North Africa (MENA): MTN Irancell, MTN Afghanistan, MTN Cyprus, MTN Sudan, MTN Syria and MTN Yemen.

4 MTN Innovation firsts Prepaid in SA MTN Customers can enjoy cellular services without entering into a contract or undergoing credit checks MTN Zone Dynamic tarriff discounting GSM Payphones Cellular based payphone that supports voice, fax and data Fax Mail Allows Users to receive and store faxes on their phone and later download to a fax machine SMS Chat Allows several people to communicate concurrently using SMS

5 Convergence is happening in multiple forms Industry convergence ( IT, Telecom, media) Terminal and device (ipad, smart phones, MP3 players, cameras, PDAs, PC s) Voice and data (e.g. voice comms. in IP data networks) Convergence Digital convergence (media and information in digital format) Network Convergenc e (fixed and mobile) Services and applications (combining app types together) IP Convergence (voice, video, data, and images over a single network) 5

6 2 nd Battle for convergence Credit Computers Internet Banking Telecoms Watch Mobile Advertising Camera Music Mapping Gaming Print Broadcast The aggregate value of all these industries in 2009: 5 Trillion dollars

7 Radical Consumer empowerment

8 Cross-Industries Attack Apple, Google & Social Media players are after advertising and premium services revenue and putting network revenues under pressure Network Connectivity Voice Community Messaging Media Aggregators Content Distribution Application Provider Device Manufacturer Mobile Broadband, 3G noknok MTNPlay ichat AppStore MNO Ovi Chat Ovi Music Store Ovi Publisher & UGC GoogleTalk, Gmail, SMS MobileMarket Android IM Open SkypePhone Core Business Aspirations

9 Bit Pipe vs. Smart Pipe End User = Bit Pipe Network Enterprise Content Providers Service Providers Mobile Marketplace + Channels + User Profile + CRM data + Presence + Charging + Hosting Environment + Location & movement Network End User = Smart Pipe

10 Cloud Computing - The re-born of the 90 s ASP business concept Security services/skills (on top of network quality) will be key to enable the growth of cloud computing services Key issues in the Cloud Market What may stop / slow down the growth? What may drive a fast expansion? Lower upfront investment Accelerated deployment Flexibility and scalability Focus on core business Security concerns Legacy IT investments Internal CIO resistance Software providers minimizing cannibalization Driven by more tangible drivers Driven by more intangible drivers ASP Application Service Provider

11 Cloud Computing - Value chain players As key players enter the market in different places of the value chain, the cloud computing market is poised to be very competitive in the future Cloud Service Enabler Cloud Service Provision Software Deployment Hosting Infrastructure Platform/Software Business model Develop standard and tailor-made cloud computing solutions Deployment of public clouds for Cloud Service providers and private clouds for enterprises Integration with enterprise networks Managemen t and hosting of private clouds for enterprise Offer end-to-end solutions based on cloud computing that allow companies to have reliable, scalable solutions with minimum upfront and complexity Main players Target Enterprises and Governmen t SMEs

12 Saas opportunity for SoHo/SMEs Opportunity for Companies to acquire the most current software cheaply with a faster implementation time. Secure, efficient business processes/workflow Service level improvements for SME to his Customers Subscription or PAYGO pricing options SME s will capitalize on this trend to reduce capital risk which may result in better cash flows

13 Benefits of Cloud based SaaS Increased Data Revenues Reduce Churn Opens up new sales channels SaaS Grow Market Share & penetration in SMEs Competitive advantage One stop shop Source : Adapted from ABI Research 13

14 M-money - Market opportunity Mobile money is a means to extend financial services beyond the banked population and contribute significantly to economic development of emerging markets Mobile money Potential (people Bln, 2012) Mobile users Impact on GDP growth of emerging markets (increase in GDP growth if 10% increase in penetration) Mobile users % 1.2% >1.5% Mobile Broadband Financial Services Mobile networks facilitate reaching the unbanked and provide them with affordable banking services Financial services development significantly aids economic development Source: The Economist article published in October 2009, WCIS, Delta Partners Analysis 1 Accounts for distinct individuals with mobile phone, hence eliminating dual SIM effect

15 M-money - Options One operator can provide different models of m-money but M-Payments is the only one that truly enables to strengthen client relationship and generate revenue A M-remittances 1 B M-payments 1 C Virtual Debit/Credit card D M-bank account Description Money Storage mechanism Transfer money nationally & internationally from your mobile wallet Pay for goods/services using a wallet stored & accessible via mobile phone Pay faster at POS terminals (eg: via NFC) by linking you mobile phone to your bank account/credit card Wallet provider Wallet provider Debit/credit card Bank account Subscribe to a limited bank account accessible only via mobile phone Secure access to normal bank account Bank account Opportunity for operator Potential role Wallet Distribution Wallet Distribution Distribution Distribution Customer relationship ownership Medium/high High Limited Limited 1 Based on wallets True differentiator

16 M-money Players Key benefit for operators is in differentiation and distribution channel cost reduction Examples Rationale Competitive edge Mobile operators Increase customer loyalty & share of wallet of existing base Acquisition of new customers Obtain savings in distribution Customer base Distribution channel (emerg. mkts.) Contact interface with the client Virtual payments / transfer providers Banks/ FS players Internet players Handset hardware manufacturers Generate revenues from mobile / online payments Cooperate with banks & operators to offer new services Mobile as a channel to increase number of transactions Drive the cash world into a cashless world Establish the strongest switch in a market Replicate in the mobile world the fixed Internet value chain (Revenue driven by advertising/affiliate marketing and payments (transforms operator into pipe) Strengthen device distribution block the access to the client Become the airtime retailer of operators Financial services as well as technology know-how Financial knowhow & established efficient and reliable processes Trust-worthy brand Existing customer relations Online scale and mobile interfaces Global trusted brands Capability to offer better VP to retailers (lower payment charges) Existing customer trust / brand Distribution network in emerging markets

17 Innovation Opportunities 100m customers unconnected to the internet 40m (partially) connected customers Very strong in Corporate Social Responsibility and Green Large market share and brand awareness Distribution - retail footprint and SIM card distribution Connectivity and data centre infrastructure Device manufacturer relationships SIM card with features Declining prices of smartphones & feature phones

18 Innovation challenges Low disposable income of customer base Low PC penetration and deployment of mobile broadband Segmentation and business intelligence Revenue dependent on small number of customers Spectrum licences and challenges Regulatory challenges Opex rising faster than Revenue Bank penetration & credit cards

19 Thank You