1. MTN Uganda's MobileMoney service has become cash-flow positive just 14 months after launch, illustrating that there is money to be made in mobile money. 2. Approximately half of MTN Uganda's mobile money gross profits have come from indirect benefits like reduced churn, savings from airtime distribution, and increased voice and data usage. 3. The financing requirement for a successful mobile money service depends on variable and step costs, but operators must invest in marketing and customer support to ensure success.

1. Paul Leishman, MMU Manager February 2011, Barcelona Is there really any money in mobile money?

4. The findings…

5. Is there really any money in mobile money? Monthly Revenue Monthly Cash Expenses Monthly Net Cash Flow Cumulative Financing Requirement MTN Uganda’s MobileMoney: Cash-Flows MTN Uganda’s MobileMoney is now cash-flow positive on a month-to-month basis, just 14 months after their launch MTN’s cumulative financing requirement was less than US$4 million dollars

7. How much must operators invest before earning a profit? Total Year-1 Year-2 Variable Costs Step Costs Fixed Costs MTN Uganda’s MobileMoney: Cost Breakdown The financing requirement for a successful mobile money service will ultimately be driven by step and variable costs.

8. Key learnings…

9. How can operators maximize direct revenues? Revenue from transfers to registered customers Average volume of transfers to registered customers Average volume of transfers to unregistered recipients 1 Enable transfers to unregistered recipients Mobile market share % Transfers to unregistered recipients Revenue from unregistered recipients Revenue from transfers to unregistered recipients

11. How can operators unlock airtime distribution savings? 2 Promote specific uses of airtime top-up in above-the-line marketing 3 Use contests and draws as a substitute for permanent discounts to avoid negating savings. 1 Gauge the size of the opportunity   “ Top-up with mobile money after hours” “ Top-up with mobile money in any amount” Illustrative Data Size of discount paid for selling scratch-cards Cost of card production, inventory, and fraud Cash-in commission paid to agents Customer discounts and agent commissions Opportunity 9% 3% 0.5% 10% 1.5% + – – = “ Old” scratch-card related costs mobile money can eliminate “ New” costs that are part of facilitating mobile top-up

12. How can operators drive increased consumption of voice/SMS? Incidence of multiple SIM in the Philippines (2009 survey) Use of mobile money SIM as primary (2009 survey) Potential up-side for MNO is immense – but airtime top-up cannot be the only service at play. “ Please indicate how many SIM cards you carry” “ Which SIM card do you use as your primary SIM?”

13. How can operators manage their costs? 2 Ensure SIM strategy is aligned with growth projections 1 Protect highly strategic, comparatively inexpensive activities MTN Uganda’s MobileMoney: total costs to date Agent network costs Customer acquisition and registration costs Cash-in/cash-out commissions Technology costs ARPU loss from discounting Selling expenses G&A  Agent network costs  Customer care 3 Focus on active customers – not just registrations

14. Summary 1 MTN Uganda has illustrated that there is money in mobile money ... 2 ... And that roughly half of the value comes from indirect benefits , including reduction in churn, savings from airtime distribution and uplift in consumption of voice and SMS. 3 It’s difficult to say how much an operator must invest since the financing requirement is driven by variable and step costs ... 4 ... But success will only materialize for operators that bet on their own success with investments in marketing and staff.

15. Q&A