Emerging-markets cellphone group MTN wants to become a serious force to be reckoned with in the mobile content and application space, with plans to launch an app store and offer digital music downloads and other value-added services.
The strategic shift in direction comes as growth in data on networks in the 21 countries in the Middle East and Africa in which it operates continues by far to outstrip the growth in its traditional voice business. The group had more that 116m customers on its books at the end of 2009.
Christian de Faria, formerly the vice-president for MTN in West and Central Africa and now the group’s senior vice-president for commercial and innovation, is leading the initiative.
De Faria, who has also taken on procurement and marketing responsibilities for the group, says the rise of services like Facebook in recent years have resulted in a dramatic change in the way consumers use their phones.
He says MTN has to respond to these changes if it’s to prosper in a world of smartphones and tablet computers.
“The time when operators could dictate what they offered to customers is over,” he says. Competition has increased dramatically in the markets in which it operates and consumers are being exposed to an ever-wider spectrum of products. “We realised we needed a function at group level that could really ensure we were on top of the game.”
Though De Faria is reluctant to provide details of what an MTN-branded app store might look like, or even what it will be called, he hints that a number of offerings are in the pipeline, including a digital music download service.
“We have concrete plans to broaden our offering in music, but I can’t be more specific. It is our strategic intent. But that’s all I can tell you at this stage.”
Handsets manufacturers such as Nokia and Apple and Internet software companies like Google already offer app stores, cloud computing services and music and other content. De Faria says MTN will both compete with and form partnerships with companies such as these to provide services to customers.
Operators worldwide are concerned that they will become little more than low-cost (and low-margin) “dumb pipes” over which third-party developers will provide and profit from services. It’s clear MTN doesn’t want to be left out of the application and content party.
“It’s no longer about selling airtime,” De Faria says. “Now it’s about bundling airtime with products and services. We need to ensure we can offer a range of services, from app stores to music to value-added services like m-health.”
MTN, he says, is “shifting from distributing airtime to being a solution provider” to customers. “We could do it on our own, but we are going into partnership with content providers to offer services such as cloud computing, solutions for small and medium enterprises and to provide rich content in terms of music, gaming, entertainment and news.”
These services will begin to be rolled out in 2011, though De Faria is reluctant to say when an MTN-branded app store or music service will be launched, citing competitive reasons.
Although the shift in focus will mean that MTN will compete more directly with products such as Apple’s iTunes Store and Nokia’s Ovi Store, he says the group is also keen to work with those companies to provide services.
“We have to develop solutions on our own or together with partners,” he says, adding that MTN won’t create a division specifically staffed to develop apps that compete with products like Facebook.
“We have realised that the world is changing, and, to quote Darwin, it’s not the strongest or even the most intelligent who will survive, but those who are most adaptive to change,” he says. “There is a clever way to partner with anyone in this market, making sure you safeguard the interests of your stakeholders.”
MTN is already working on payments engines to make it easier for its customers to purchase apps and content. De Faria says the group wants to make it easy for consumers to buy services, even if they don’t have a credit card — using mobile wallets or airtime for payments, for example. — Duncan McLeod, TechCentral
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