Mobile incumbents start to make early moves towards an all-data future by targeting online transactions and services

Top Story

Vodafone’s contested acquisition of Kabel Deutschland was highly publicized and is but one high-profile move by one of the former “masters of the universe” to address the all-data future. Two similar things have happened in Africa that are closer to home.  Firstly, Millicom invested in Rocket Internet’s African companies and MTN pledged a wodge of cash for Amadeus Ventures’ for investment in online and mobile applications and services.

When it comes to content and services, Africa’s mobile users have by and large not voted for content and services that are offered and run by mobile operators. As ever mPesa remains the exception that proves the rule.

If mobile’s not just for voice, then it is a rather unusual combination of transaction channel and media device. So what do you do to get into both of those spaces? The last five years show that mobile operators are not content or transaction services guys. Nearly all mobile VAS departments have not really covered themselves in glory in terms of driving use and revenues.

The strategic problem is a bigger one. Despite the shift to data, the centre of gravity of a vertically integrated mobile operator remains voice revenues and looking after the network. Companies like Vodacom and MTN have set up corporate ISP operations but they struggle for focus within the pull of the bigger company’s centre of gravity. The reason niche, independent corporate ISPs continue to exist is that they are able to offer focused customer attention. It’s not the call centre operator telling you he or she will just have to talk to another department and come back to you.

Now if it’s hard to get focus on something with revenues like corporate data business, imagine how much more difficult it is to do it with content and transaction services where the potential is today and the revenues are almost certainly tomorrow. It seems that both Millicom and MTN have sought to solve this problem by becoming investors in these kinds of companies. If they are a great success, they can buy them up and if they’re not they can sell them off to another investor.

Millicom International Cellular made the first move in May this year by putting an additional US$45 million into Rocket Internet’s online investments in Africa (which also got money from Summit Partners): Jumia, Hellofood, Kaymu and Vamido. The additional money is being used to expand into new markets including Nigeria, Egypt, Morocco, and Kenya

Millicom’s President and CEO, Hans-Holger Albrecht said at the time: “The opportunities look even greater than when we first decided to invest in them. In Africa, e-commerce could hasten the evolution of the established retail sector as consumers increasingly adopt the digital lifestyle. That is why such timely investment is of essence.”

In investment terms, the play is surely very similar to what Tiger Capital is doing with iROKO. None of the global online companies like Amazon or iTunes has much of a customer presence in Africa. So with sites like Jumia you can build the regional equivalent of Amazon and provided you have access to capital, there will come a point where increased broadband access, changing buying habits and a rising middle class will get you close to success. At which point, the mobile investor can buy or it can sell on and make a reasonable return. The investors and the mobile company investor spread the risk.

MTN’s move in July 2013 was to put a slightly larger sum (US$75 million) into Amadeus Capital Partners’ IV Digital Prosperity Fund. It will invest in late stage venture and growth companies, predominantly in mature markets, developing online and mobile applications and services targeted at the rapidly expanding middle classes in Africa, the Middle East, Asia and Latin America. In its official announcement Amadeus said that the investment was “focused on technologies that leap-frog desktop applications and services to those designed specifically for ‘mobile first’ and the technologies and platforms that underpin such services.”

Now all the mobile incumbents have to do is to start making their own distribution channels and product and services marketing capabilities fit with this different future…but that’s a story for another day.

Video briefings on:

Making mHealth work:

Maeghan Orton, Medic Mobile on using SMS services to connect rural unconnected clinics
Maeghan Orton, Medic Mobile on how SMS generated health data can be used for decision-making

New content for mobile phones:

Kenyan writer Binyavanga Wainana plans to set up a digital publishing house to sell cheap African pulp fiction

Kenyan booking portal set to expand across Africa and in the Middle East:
Johann Jenson, on how this accommodation portal works and its expansion plans

More successful bloggers are now attracting advertising:
Kennedy Kachwanya on the size of the Kenyan blogosphere and what people are writing about

Think before you launch an app – User-based research essential:
Mark Kamau, UX Lab on how research with users can overcome barriers to mobile apps adoption

Citizen Journalism:
Santos Okottah, Eziki on its citizen journalism app Reporta that's also being used for weddings

TV White Spaces Briefing from Dakar event sponsored by Google and Microsoft:
Paul Mitchell explains Microsoft's TV White Spaces pilots and why it thinks TVWS is important

Kai Wulff on Google's TV White Spaces pilots and why they are important for developing countries

Africa’s Tech Incubators:
Karim Sy on the innovative projects Jokko Labs supports and the expansion of its network

Africa’s first accelerator 88mph:
Nikolai Barnwell - How Africa's first accelerator 88mph will to help create local content & services

Viewing and talking about football in Africa:
Football, TV viewers and social media:
Gary Rathbone, Founder Sports News Africa (formerly Head of Supersports) on African TV sports watching habits and the rise of the tablet as first screen

Premier League football agent Ayo Alli on the launch of his football social network site Gbamm!

Computer gaming in Kenya:
Wesley Kirinya, Leti Games on its new games and comic series based on African myths and legends

Nathan Masyuko on the launch of Kenya's first computer games league

For breaking news, follow us on Twitter: @BalancingActAfr