Telkom mulls mobile money offering
Telkom Mobile is considering the inclusion of a mobile money service as part of its consumer offering – a move analysts say is essential in a telecoms era that is forcing mobile operators to focus on value-added services (VAS) suites, rather than traditional services.
Telkom communications head Jacqui O'Sullivan says the company is "currently exploring a number of options with regards to the inclusion of mobile money as part of its service offering". Although a final decision is yet to be taken, she says Telkom will make an announcement in this regard in due course.
Both of SA's main mobile players have been offering a mobile money service for some time now. Vodacom launched its first – and unsuccessful – iteration of M-Pesa in SA in September 2010, while MTN brought Mobile Money to the local market in November 2012.
Although Telkom Mobile only holds about 2.2% of the mobile market – about eight times less than its nearest competitor Cell C (18%) – analysts say, with the right partnership, the 2010 mobile entrant could make a mobile money offering work.
In fact, says World Wide Worx MD Arthur Goldstuck, it is not a case of whether offering a mobile money service would be viable for Telkom Mobile, but whether the company can afford not to offer one.
There is a patent need for mobile money services across the board in SA, say analysts, and mobile operators can simply not afford to neglect this. Ovum analyst Richard Hurst says every mobile user should be able to use their mobile device to pay for goods and services.
"The mobile money space in SA needs to be looked at as part of a suite of VAS. While Telkom may not have the same scale in subscriber numbers as others, it will probably need to launch a mobile money service to retain and gain customers.
"[Telkom] will need to keep transaction costs as low as possible and promote interoperability. In light of this I think Telkom is probably going to launch a mobile money service with a banking partner to reduce costs and risks."
Damned if you dont
Unfortunately for the mobile operators, there is very little margin to be had in the mobile money market, says Goldstuck, "particularly in SA, where mobile networks have to partner with financial services providers, and therefore have to share that limited margin".
Unless they are dominant players, mobile operators are unlikely to see such services making up for the fall in profit from voice, he adds.
BMI-TechKnowledge director Brian Neilson says any success to be had by Telkom would depend largely on partnerships. "In SA, the banks are very active in the mobile money space, and retailers are also part of the ‘food chain' – for example by offering till points as ATM surrogates. It is not impossible for a new entrant, like Telkom, to partner with a bank or even a retail player with a massive share of consumer footfalls, and still have an impact. That said, starting from way behind the pack is never easy."
Neilson says margins are coming under pressure in general. "This applies to commodity data services and to VAS like mobile money, so increasingly volume will be the name of the game, and perhaps only the largest will survive."
It is also difficult to differentiate in the mobile money space, say analysts. At the end of the day, says Hurst, for mobile operators the option of a mobile money service is a "damned if you do and damned if you don't" scenario.
Source: ITWeb 19 February 2015