Is there Really any Money in Mobile Money?

This study explores whether mobile money can be profitable through the case of MTN Uganda’s Mobile Money (MM).

Mobile network operators (MNOs) in developing countries are launching mobile money services at a rapid pace. Safaricom’s M-PESA has proved profitable in Kenya. The study examines whether MM too holds promise of such profit. Findings indicate that:

• MM’s cash flow is positive on a monthly basis;
• MM owes 48% of gross profits to indirect benefits unique to MNOs;
• MM’s customer growth has driven its financing requirements;
• MNOs cannot assume any generic amount that they need to invest before getting profits;
• Successful mobile money services’ financing requirements will ultimately be driven by variable costs;
• MNOs who offer mobile money services earn savings from airtime distribution;
• Churn rate for actual mobile money customers is negligible;
• Promise of reduced churn can be realized only by well funded and effectively executed deployments;
• MNOs have found success by promoting mobile money as an option for topping up in small increments;
• MTN Uganda’s customer tariff model grants customers minimum leeway to defraud the operator of prospective direct revenues.