MTN Pulls Plug on Mobile Money Business in South Africa

MTN Nigeria

South-Africa owned telecommunications giant, MTN Group (MTNJ.J) has scrapped its local mobile money business, stating that the business it is not viable in a country where around three quarters of the population already has a bank account.

The service provider launched its South African service in 2012 after the success of Safaricom’s (SCOM.NR) M-Pesa in east Africa convinced some executives the service was the industry’s next growth area.

However, MTN, Africa’s biggest wireless phone group, now joins Vodacom (VODJ.J) in pulling the plug on the service in South Africa.

Mobile money services which allow customers to transfer funds using their phones have proved hugely popular in some other parts of Africa, particularly where people have less access to traditional bank accounts.

“The operating costs of providing a mobile money platform has become prohibitive,” MTN said in a statement on Thursday.

“MTN is still committed to remaining a significant player in the financial services space and we are exploring opportunities in financial services space and other adjacent sectors,” the statement read.

MTN said its decision did not mean a complete exit from financial services.

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