MTN Nigeria: On a Y’ello brick road

MTN Nigeria: On a Y’ello brick road

The entrance of MTN (Mobile Telephone Network) Group, a South African-owned company into Nigeria was like a fountain of water on desert land. After a long wait for a solution to the telecommunications nightmare in Nigeria, following the failure of NITEL, many Nigerians were excited to finally have access to high-grade mobile telecommunication services. MTN has proven strong and unbeatable in the Nigerian telecommunications market for over 15 years.

It will take an intellectual and management challenge to displace MTN”, said Keem Belo-Osagie, the former Chairman of Etisalat now 9mobile, one of MTN’s main competitors, in an April 2013 Forbes interview. He adds Realistically, I don’t think any company can beat MTN in Nigeria because the gap is very large between MTN and everybody else. And while I think that MTN can improve its quality of service, it has strong management, there is a real commitment to Nigeria, and they’ve also done a lot in terms of the development of local staff.”

What made MTN Nigeria thick through these years?

Let’s explore a brief SWOT analysis of MTN Nigeria.

Source: Naspire Analysis

Source: Naspire Analysis, 2018

Over the years, MTN Nigeria has carved a niche for itself by entering into uncharted grounds, furthering its position as the top telco brand in the country with a 42.1% market share. Based on the 2017 MTN Group Report, Nigeria ranks 2nd in Revenue contribution (27.2%, behind South Africa’s 32.2%) though it ranks 1st in the number of subscribers (24.1% vs South Africa’s 13.6%).

… the journey to a Y’ello brick road

In dissecting how the Y’ello brand became famous across Africa, MTN’s comparative advantage can be analyzed from the following lenses:

  • Distribution channels
  • Growth Strategies
  • Marketing communications
  • Strong management team

How Y’ello Nigeria became a household name

For any business, strategic positioning is key to standing strong in the face of stiff competition and regulatory challenges. Lagos, Nigeria’s second most populated city, is the commercial nerve centre of the Nigerian economy but not necessarily where comparative advantage is achieved. Retrospectively, other regions have proven viable to its success in that the value-added services which are taken lightly in places like Lagos are highly utilized in the Northern regions like Kaduna, Kano, Sokoto, etc. The graph below indicates how MTN Nigeria became the biggest network in the country:

Source: MTN Nigeria report

This laudable strategy for distribution to subscribers across all regions is peculiar to MTN Nigeria.

How to compete…Y’ello style

One significant way to be ahead of your competitors is to LISTEN to what the MARKET is NOT SAYING. Though MTN appears to be getting loads of accolades, it deserves them because it has listened to the unspoken needs of the market environment. MTN has taken the lead in the distribution channel (as highlighted earlier), recording month-on-month consistent performance. Furthermore, the MTN Group’s focus on data and digital services was mostly responsible for the improvement in Group revenue for 2017 (MTN Group Report) supported by stable outgoing voice revenue (increasing by 0.1%). MTN Nigeria’s data revenue increased by 86.6%, due to the improved quality and capacity of data networks in key areas.

In addition, its fibre optic connections became a lever for its improved data connection services although delayed approvals for Right-of-Way (ROW) permits, multiple taxations by the Federal and State governments and obstruction of works by the Nigerian Inland Waterways Authority (NIWA) all added to its inability to deliver on its promise of prompt 3G services.

However, there are regions where MTNN failed to meet its expectations. For instance, during the Boko Haram crisis in the North-East region, many subscribers suffered the impact of network congestion and disconnection which cost the lives of their loved ones. This happened at the time when NCC slammed it with a 330 Billion Naira fine for non-compliance on disconnection of unregistered GSM lines. In the Southern regions, where there is stiff competition, MTN lost its subscriber base to competitors due to various service offerings. This became part of the challenges experienced in 2014-2016.

Summarily, the most profitable strategies MTN has maintained are consistency in its management team, operational strategy and financial stringency, which have helped in maintaining its position as a leading telco.

Growth Strategies: Everywhere You Go…

To say MTN is a forward-thinking organization is likely an understatement. MTN has proven to the business environment that winning is not only about numbers, it is also about innovation and adaptability to market conditions. MTN has recorded growth beyond its core services of voice calls or data; it has successfully ventured into other values added services such as Comedy, Music, Content marketing, Solar energy amongst others.

MTN Comedy plus is a product offering that serves comedians and their audience. In 2017, MTN launched Comedy + service, a digital platform that houses Nigerian comedy content to drive traction to comedy as well as to create additional sources of income for comedians.

Another innovative growth strategy was the Port-A-Number service MTN adopted. The subscriber doesn’t have to change its number but its service provider. Using Saka the comedian as its ambassador (who was associated with Etisalat at first before he “ported” to MTN) was one of the smartest marketing moves MTN used to improve the perception within the market.

Recently, MTN launched a new B2B platform called “Man-in-a-box”, where SMEs are given leverage on the MTN Small Biz platform to showcase their businesses. This is a function of Content marketing, a new way of buying and selling to a target audience. The marketing communication adopted to drive this platform was quite impressive. Using various social media platforms and influencers, MTNN made the public curious so much that the motive was unknown until the campaign was concluded.

Project Fame!

MTN has maximized effectively the use of the 4Ps marketing mix: Product, Price, Promotion, and Place for the Nigerian business environment. The use of promo packages such as Family & Friends, Xtratalk, etc were good marketing tactics that motivated consumers to sign up with MTN.

Events sponsorship is another marketing communications tactic that recorded a huge success for MTN. “Who wants to be a Millionaire” was a huge success. This program placed MTN in the minds of both subscribers and non-subscribers as its loyalists and participants usually inform their family and friends of their involvement. However, the program was stopped as part of cost rationalization due to the NCC fine. Also, ‘Project Fame’, the annual singing competition has also been a hit with Nigerians.

The integration of this socio-corporate communication and brand excellence has made MTN be in a class of its own in terms of marketing communications.

Those who call the shots …

“Numerous studies and my own experience as a serial entrepreneur have proven that companies with a diverse management team provide greater returns to investors” – Jay Samit

The management of MTNN has also made a significant impact on the general performance of the company. The management structure and skill capability are strong points for MTN. Selection into the management tier has been based on competence, skill capability and efficiency.

MTNN’s organizational structure is based on the Matrix of Works model which describes work in terms of complexity and unique themes. Hence, it poses unique new conceptual requirements for decision-makers and leaders. (Source: MTNN HR Policy document)

Efficiency and effectiveness are two measures used in describing a good management structure. MTNN successfully strives in this area regardless of the challenging macro environment and market. Its model of employing capable skill sets who undergo specialization in their technical roles before transcending to higher roles has proved viable. The vertical decentralization structure has also helped decision making. Rather than the long bureaucratic ladder to the Regional Manager for approvals, the practice of having Divisional Heads for each division has removed that bottleneck. (Source: Online)

It is also worthy of note that former MTNN staff have gone on to other companies to replicate the same success. Ahmad Farroukh, the former CEO MTN Nigeria, recently joined Smile Telecoms Holdings, as the Executive Director, Operations. Another former CEO, Adrian Wood is now the chief promoter for Teleology, the preferred bidder for 9mobile.

Painting Nigeria in Y’ello Money…

MTN Nigeria has made a tremendous socio-economic impact on the Nigerian economy. With its reach across the six geo-political zones, MTN has continued to invest billions of dollars in fixed assets and hi-tech facilities across the country. About $4billion has been invested in the Nigerian economy through various corporate projects, levies, duties to the government and regulatory licenses. With billions of US dollars invested in network infrastructure alone, giving rise to a 10,457km digital transmission backbone, and a separate 9,056km fibre-optic superhighway (the largest privately-owned fibre optics system in Africa), MTNN has proven its vision in leading new and bold digital services to its customers. The acquisition of the Visafone Mobile in 2016 was a huge feat, aimed at increasing MTN subscribers’ database and CDMA capabilities.

As an oak tree that stands firm even with stormy challenges on every corner, MTN strategically gained improvement as disconnected subscribers returned to their first love. (About 11.5 million subscribers were initially disconnected but more than 50% reconnected), with an enhanced system to ensure regulatory compliance is implemented.

Men lie, Women lie but Numbers don’t lie!

Source: MTN 2017 Investor report

This table above shows Nigeria’s contribution to the MTN Group.

Entertaining its way into the heart of subscribers…

“I don port ooo (2ce), I don port go MTN…” Does this line ring a bell?

It is arguable that MTNN has the best marketing strategies among the telcos. Using strong Above-the-Line (ATL) communications tactics, it has proven this over and again with catchy advertorials that have become household expressions. With the right communication models (especially the AIDA model of advertising), MTN has captured the attention of a general audience, subscribers and non-subscribers alike using evergreen adverts like “Sunshine, a.k.a Oh Jerry”, “Mama na boy”, “I don port o, amongst others.

Just like Coca-cola, MTN is gearing towards capturing a niche for its brand with various strong captions that pique the audience’s interests. For every new product/service offering, there is always a multimedia advert that incites actions from subscribers. For instance, the “Oh Jerry” advert was actually titled “Sunrise” but the sensational feel from the conversation was so effective that people referred the advert as “Oh Jerry”. These adverts were strong publicity campaigns that created strong brand equity for MTN Nigeria.

Y’ello Foundation …. a Line that cares

MTNN has funded many charity projects through its MTN foundation, with a focus on Women and Birthing. With its slogan “Walk-for-life” or “Yellow-heart”, there have positive impacts made on women across the 36 states. Over 10 billion Naira has been expended on these impact areas.

…And then the Storm came

MTN experienced a 10% decline in the number of subscribers from 2014 to 2017 which was due to the N1trillion ($5.3bn) fine imposed on it by Nigerian Communications Commission (NCC) in 2016. The fine was for not disconnecting up to 11mn lines without proper registration processes. MTN accepted the wrongdoing and the fine was later reduced to $3.9bn after negotiations.

So far, MTN has pumped a lot of money into paying fines which affected its human capital development and marketing expenditure. In a bid to reduce its recurrent expenditure and increase operational performance, MTN sacked close to 250 long-serving workers and about 100 contract staff from its employ. This also affected the company’s corporate image as it was perceived as creating an unconducive work environment for staff.

Between 2015 and 2016, the legal strain between the NCC and MTN further affected its market penetration. MTN sued the NCC, challenging the regulatory body for directing that they disconnect more than 5m unregistered subscribers. Between Q1 2014 and Q1 2016, MTN’s market share declined by 7% with 2% caused by NCC directive and 5% by competitors. (Source?)

The decline in Crude Oil price which inadvertently affected the Nigerian economy, currency and increased inflation further inflicted more pain on MTN via loss of high-value subscribers. The Boko Haram challenges further impacted its North-East operations negatively such that connections depleted affecting subscribers in dire situations. The devaluation of the Naira impacted local earnings alongside insurgencies in major parts of the nation.

Taking a walk down the Y’ello brick road

Though MTNN has had its fair share of the volatility of the Nigerian economy, it appears it doesn’t intend to be beaten anytime soon.

Following the MTN Group strategy review in H1 2017, MTN operationalized its BRIGHT strategy. This is arranged under six pillars comprising: Best customer experience; Returns and efficiency focus; Ignite commercial performance; Growth through data and digital; Hearts and minds; and Technology excellence.

MTN’s operational strategy has ensured that its internal and external reputation is given a very efficient focus. With MTN Nigeria as a strong base, MTN Group is doing all it takes to keep itself as the top leading telecommunications in Nigeria and Africa at large.

The On-Demand performance with Financial Institutions keeps increasing steadily with Zenith taking the lead. Its market share in the telecommunications space is still head-on with a huge margin between other players. One of the key processes the telecoms giant can exploit is in financial services. In the recent past, it provided a financial solution called Mobile Money (MoMo) but it was met with stiff resistance in Nigeria. Although, mobile money is still a success in countries like Zambia, Rwanda, and other African countries where MTN is present.

Recently, MTN Nigeria launched an On-Demand mobile service, *904# for easy recharge. This service works on all banking platforms. This is obviously an alternative to regular onsite bank visits and mobile app for banking operations. People residing in rural areas whose commute to bank locations are long would find this operation useful. Subscribers would not need to scratch a card or queue up to purchase a recharge. (Source:

What does this hold for a service retailer?

With the ever-increasing operational costs, MTN has strategically picked its spot and ensures stringent measures are in place to achieve operational success with minimal loss. From its 2017 Investors Manual, optimism is expressed through future goals of improved competitiveness and operational performance.

Progressive efforts are ongoing to retain its market position and allow for local participation. Recently, MTN proposed to list its shares on the Nigeria Stock Exchange (NSE) which would allow the public to buy into the shares of the company. There is extensive local marketing to target Nigeria investors and increase the retail offer. However, any reduction in ownership by MTN Group in MTN Nigeria is expected to be limited. (SENS 2017). Though this is a good opportunity for Nigeria investors, MTN Group is not yet ready to let go of controlling ownership of the MTN Nigeria. Realistically, this is a good strategy, to maintain an efficient standard on which the Group and its subsidiaries were built on.

In conclusion, it is hoped that as MTN Nigeria explores the greenness of the luscious Nigerian soil, the company can explore the insatiable appetite of the millennial and Gen Z generations who are taking up the larger part of the population. With the continuous rise and rise of new technology and internet usage (the likes of social media), MTN Nigeria is on a roller coaster to succeeding if strategic steps are taken. Value-added services, promos and offers, financial services, etc are revenue generators that would benefit investors, stakeholders, and even the government.

This case was initially published in 2018