Why MTN Uganda Remains Ahead of Rivals in the mobile money department


MTN Uganda recently made its first revision of mobile money fees since the service was launched in 2008, with an increment of between UGX 100 to UGX 200. According to MTN, the rise in tariffs is geared towards providing customers with the best services.

“MTN strives to constantly improve service delivery to our customers… ,” Ernst Fonternel, MTN Uganda’s Chief Marketing Officer, said in a statement. “We are adjusting our tariffs slightly, relative to
the benefits associated with mobile money to ensure we have a sustainable business model for the future.”

The changes come at a time when mobile money has gained popularity as an efficient way to effect financial transfers. Payments for utility bills like water, electricity, have never been easier. Many people are also now using mobile money to pay school fees for their children. Even traders going to shop carry their mobile phones instead of stashes of cash.

But could the increase in tariffs impact on the mobile money business?

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Not now, experts say. Lawrence Bategeka, the acting principal at the Economic Policy Research Centre (EPRC), Makerere University, says MTN Uganda’s upward revision of mobile money tariffs will do very little to slow down the appetite for mobile money services.

“Mobile money tariffs will depend on the elasticity of the demand. If it [demand] is inelastic, we may see the service provider reap more profits. We can only expect prices of telecom services to rise further,”
he said.

GSMA’s “Mobile Money for the Unbanked” 2012 annual report says that with more people owning mobile phones, an increase in cost may not necessarily deter people from transacting more, especially since they will be sending money on the same network, which is cheaper.

“In June 2010, [a] survey indicated that 43 per cent of mobile money users in Uganda were ‘multi-Siming’; while the proliferation of dual, trio, and even quad-Sim phones around the world provides anecdotal evidence for the trend,” the report noted.

The customers’ main concern will be the network. MTN has been accused of overseeing an unreliable network, which has cost mobile money operators money.

source: The Observer