Subscribers to bear the brunt as South Africa’s MTN dares banks, fintechs

On April 2, customers of the largest mobile telephone network in Nigeria MTN received a message from the company that “bank recharge channels” were unavailable.

MTN urged its subscribers to use physical recharged cards instead.

“Please pacify MyCustomers and educate them to use MTNTopit, MoMo channels, as well as the debit card options on MOD or myMTN app,”
MTN said in an internal memo to customer service agents.

Media reports said Nigerian banks cut off the South African telecoms giant after the latter decided singlehandedly to cut back on the commissions it pays out to banks and fintechs on the sales of airtime and data.

A source at a fintech in Lagos said on Saturday that the move buy MTN will cut sharply into the already slim profit margin many fintechs enjoy on airtime and data purchase.

“The biggest casualties of MTN’s aggressive exploitation of Nigeria are not just the SMEs who are seeing their commissions constantly cut down till they die out of business; ordinary Nigerians bear the biggest brunt, without even knowing it,” the source said.

Unlike banks, many fintechs that depend on commissions from telecoms may suffer. The fear is that if MTN succeeds, other telcos may toe the same path.

Nigeria currently has among the most expensive mobile data prices in the world, more than 10 times what Indians pay.

Telcos like MTN often use their size to keep the price of data high so that they can keep up prices and maximise profit. The profit the company was accused of repatriating to South Africa by the Nigerian government in 2018.

In fact, in 2018, the Central Bank of Nigeria accused MTN of illegally $8.1 billion in profits out of Nigeria to its home country South Africa.

It was forced to pay a fine of $53 million to the government after an ugly spat with the authorities.

MTN, like most South African companies operating in the country, has always seen Nigeria as just a cash cow. Not only has it long sought to monopolize the telco space, it nearly paralysed Nigeria’s nascent renewable energy sector when it tried to push out independent inverter retailers with its disastrous battery product, and over the past few years has been trying to get its hand on the cash deposits of Nigerians.