MTN’s Game‑Changer: Rent‑to‑Own Smartphones for Prepaid Users in South Africa

In July 2025, MTN South Africa’s fintech arm, MTN MoMo, unveiled a landmark initiative: a rent‑to‑own handset program designed to make 4G and 5G smartphones accessible to millions of prepaid users—without credit checks or bureaucratic paperwork. Priced from just R10 (~US $0.55) per day, the model gives users access to modern digital devices while they pay over time via flexible plans on the MTN MoMo app.

This major leap builds upon a previous initiative launched in May 2025, where MTN offered 4G smartphones from just R99 (~US $5.40) to 1.2 million prepaid customers, to accelerate the transition away from aging 2G and 3G networks.

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Why It Matters: Digital Inclusion and Network Modernization

• 1. Tackling the digital divide: In South Africa, roughly 85% smartphone penetration conceals the plight of 5–6 million loyal prepaid customers still using feature phones on 2G/3G—many due to poverty, not choice. As the country plans to switch off 2G and 3G networks by December 31, 2027, users with legacy devices risk being cut off from voice and data services unless alternatives are offered.

MTN leadership sees this problem clearly: “When you zoom in, 60–70% of those customers have been with us 10–15 years—they are very loyal but cannot afford a smartphone”. The rent‑to‑own solution creates an affordable pathway into the digital economy.

• 2. A fintech‑powered delivery model: This program is enabled through MTN’s MoMo mobile money platform, partnered with fintech firm Airvantage. It employs AI‑driven affordability assessments that require no payslips, no credit_history, and minimal paperwork—key for informal and underbanked users. After submitting a small deposit, customers choose repayment terms between 3 to 12 months, and only once all installments are paid will the device belong to them permanently.

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What Devices Are on Offer

The first rollout includes 4G‑enabled Samsung smartphones—specifically the Galaxy A05, A06, A16, and A26 models, with more brands to be added in August. Entry-level models (A05, A06) focus on affordability; the A16 and A26 offer improved features like higher refresh-rate screens, enhanced cameras, and 5G compatibility. MTN had already distributed Itel-made 5.5‑inch Android Go smartphones during its May initiative—in phase one, 5,000 Gauteng customers received devices normally priced at around ZAR 740 (~R99 subsidised). Later phases saw broader distribution of devices retailing between ZAR 800–1,100, subsidized heavily by MTN.

Rollout Schedule & Scale

• Phase One (May 2025): 5,000 prepaid customers—mostly in Gauteng—selected based on usage, spending, and tenure received R99 Android 4G phones.
  • Devices came with preloaded software focused on essential digital services.
• Phase Two: Expanded nationally to 130,000+ prepaid users, distributing multiple device models over months into 2025.
• Phase Three:- Final target: 1.1+ million prepaid users by end of 2026, completing the rollout to 1.2 million users in total.

Separately, the rent‑to‑own launch introduces potentially unlimited scale, as users self-select via MoMo app, rather than invitation lists.

Cost & Sustainability Model

• Device costs: Retail prices ranged from ZAR 800 to 1,100 per device; MTN subsidised heavily for selected beneficiaries, especially in the R99 campaign.
• Operational costs: Estimated at ZAR 150–190 per unit, covering courier, customer support, marketing, and incentives.
• Rent‑to‑own plan: At R10/day, over a 12‑month plan, the cost to users totals R3,650 (~US $200), allowing room to amortize subsidized device cost and operations while providing inclusive access.

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MTN has invested roughly R300 million (~US $17 million) in network upgrades within Gauteng to support increased load and speed demands of 4G/5G users coming online via these initiatives.

 Comparison: R99 Initiative vs. Rent‑to‑Own Model

Market Context & Industry Dynamics

MTN MoMo’s rent‑to‑own strategy isn’t unique in Africa’s fast-growing device financing space. Competitors like Vodacom Easy2Own, Pepkor FoneYam, M-Kopa, Teljoy, and others overcrowd this space. In 2024, the rent‑to‑own smartphone market in South Africa alone was estimated at R5.4 billion (~$296 million), with projected growth of ~5.7% annually. FoneYam alone helped over 1.5 million customers acquire smartphones through credit plans.

Yet MTN’s advantage lies in embedded fintech integration (MoMo), AI credit scoring, existing loyal prepaid customer base (~29.9 million prepaid users nationally), and brand trust.

Strategic Impact: For Customers, MTN, and the Ecosystem

• For Consumers:- This initiative empowers financially constrained users—especially those engaged in informal economies—to join the smartphone ecosystem affordably. It boosts access to education, gig work, banking, social services, and digital inclusion opportunities.
• For MTN:- The program supports migration off obsolete 2G/3G networks—reducing spectrum inefficiency—and potentially retains customers who otherwise might churn post-legacy shutdown. It also introduces new recurring transactions via MoMo, deepening user engagement with MTN’s broader fintech ecosystem.
• For Policymakers & Society:- Lays out a replicable model for inclusive digital transformation in low‑income segments, aligned with Sustainable Development Goals on connectivity and financial inclusion.

 Challenges & Considerations

1. Defaults and financing risk: While AI affordability scoring helps, informal income patterns may cause repayment issues. Non-payment could result in repossession or customer frustration.
2. Device quality and upgrades: Low-cost devices often lack robustness and future-proof performance. Ensuring a reliable user experience is key; battery life, updates, and local support matter.
3. Digital literacy: Many legacy phone users may require support to navigate touchscreen interfaces, app stores, data bundles—a significant barrier to adoption.
4. Data affordability: Phone ownership is only one part; data costs must remain affordable for true inclusion.

 Future Outlook & Expansion

• More brands coming: MTN plans to extend beyond Samsung models, possibly into devices from Nokia, Tecno, Infinix, etc., much like its earlier program with Itel and other OEMs via Smartphone For All, founded by Babatunde Osho.
• Geographical extension: While initially South Africa-focused, similar models may roll out in MTN Nigeria and other African markets, adapting local mobile money or financing partners.
• 5G drive: As 2G/3G sunsets approach, the strategy prepares a user base for both 4G and 5G adoption, ensuring the network investment pays dividends.

 Final Thoughts

MTN South Africa’s rent‑to‑own smartphone initiative marks a bold union of telecom and fintech innovation to address affordability, inclusion, and infrastructure modernization. With entry-level plans starting at R10/day, no credit history required, and flexible repayment, it offers a genuinely inclusive gateway into the digital age for millions of prepaid customers who have been left behind by traditional financing systems.

By building on its earlier R99 initiative, leveraging fintech capabilities, and scaling through MoMo, MTN is setting a new standard in technology, business, and societal impact for telecoms across the continent.