eBULLETIN #2 - Mobile Ecosystem Forum

eBULLETIN #2 News and insight from across Sub-Saharan Africa

FEATURING BUILDING MUSIC REVENUES IN NIGERIA TRANSFORMING ZIMBABWE IN TO A CASH-LITE ECONOMY MARKET SNAPSHOT: MOBILE MESSAGING USAGE IN NIGERIA & SOUTH AFRICA THE NCC CONSULTATION FOR THE PROVISION OF VALUE ADDED SERVICES IN NIGERIA PLUS REGIONAL NEWS ROUND-UP & MARKET STATS

3 FOREWORD RIMMA PERELMUTER, CEO, MEF

5 BUILDING MUSIC REVENUES IN NIGERIA INTERVIEW WITH EBERE NZEWI, MARKETING MANAGER AT HUAWEI NIGERIA

MAHINDRA MA AHINDRA COMVIVA

7 TRANSFORMING ZIMBABWE IN TO A CASH-LITE ECONOMY HOW MOBILE HAS CREATED AN INCLUSIVE FINANCIAL ECOSYSTEM SRINIVAS NIDUGONDI, SENIOR VP & HEAD OF MOBILE FINANCE AT MAHINDRA COMVIVA

9 REGIONAL NEWS ROUND UP LATEST NEWS FROM SUB-SAHARAN AFRICA IN PARTNERSHIP WITH APPSAFRICA ADVISORY

13 MARKET SNAPSHOT: MOBILE MESSAGING EXCLUSIVE MEF DATA INSIGHTS MESSAGING USAGE IN NIGERIA AND SOUTH AFRICA

16 EVERYTHING YOU NEED TO KNOW ABOUT… THE NCC CONSULTATION FOR THE PROVISION OF VALUE ADDED SERVICES IN NIGERIA

18 REGIONAL TRENDS & STATISTICS

MEF AFRICA EDITION #2

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FOREWORD RIMMA PERELMUTER CEO, MEF

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elcome to the second edition of MEF’s Africa eBulletin. In it you will find interviews and insights in to the ever-changing pan-African mobile ecosystem.

Whilst Africa’s one billion mobile subscriptions is made up of a mix of smartphones and feature phones which still account for the majority of handsets, the roll-out of 3G and 4G mobile networks means that faster mobile internet is increasingly available to new African consumers. As such, analyst firm Ovum forecasts that mobile Internet connections in Africa will reach one billion by 2020. This is a huge increase considering that it accounted for just 17 per cent of the 884 million total mobile subscriptions in Africa in 2014. By 2020 it is expected to account for 76 per cent. As smartphone penetration accelerates and reaches critical mass in the region and sales concurrently begin to flat-line in the more developed regions, manufacturers are keen to grasp the price sensitive African opportunity by providing lower cost smartphone handsets. The milestone of the sub $100 handset has been surpassed with the likes of Orange announcing a $40 smartphone handset earlier this year specifically for the African market. In particular, handsets from Chinese firms such as Huawei, Oppo and Gionee are all increasing their reach across the African market and it’s Android that dominates at the OS level. Taken together faster networks and cheaper smartphones are helping to accelerate the growth of the mobile ecosystem so that ever more evolved mobile content and services are becoming routinely available. Alongside the much-hyped areas of mobile banking, mHealth and education, mobile messaging and entertainment services such as music and in particular video continue to have a major impact as key data drivers. For example Nigeria’s homegrown $5 billion film industry, Nollywood (bigger than Hollywood by volume and second only to Bollywood in terms of market size) is using mobile as a key distribution channel for its films. Nigerian online entertainment platform, iROKOtv, are one of the largest distributors of African movies in the world. It has attracted $34 million in funding, exemplifying the huge scaling opportunity for homegrown African content across the continent and to diaspora globally. According to iROKOtv, whilst smartphones in Sub-Saharan African will outnumber TV sets by 5 to 1 and will have achieved an 80-85 per cent share of the market in video consumption by 2020, the ecosystem must continue to innovate to take consumers along on the mobile journey.


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At this year’s Mobile West Africa conference in Lagos, I chaired a panel debate on ‘Empowering, Streamlining and Enriching the Mobile Consumer’s Experience’ with Bango, Etisalat and Opera. Data transparency, the growth of mobile content including entertainment, video and music and app store carrier billing were the hot topics of the panel. Firstly, consumers need to feel confident about data management in order to have peace of mind. Opera’s Max for Android shrinks videos and photos to reduce data usage whilst Huawei MTN’s Music+ service rolls the cost of data into a subscription and allows its users to stream music for a fixed fee. However, there’s a genuine fear that services like Facebook Messenger and content that uses mobile advertising in the background will eat up precious data allowances and this remains a point of contention. As in developed markets, in order for the mobile opportunity to truly take off, data and pricing models need to be affordable, transparent and better understood. Consumers do not generally understand pricing based on megabytes and given heightened sensitivity around data pricing, mobile services need to be transparent in their pricing models with clear guidance on how much data has been spent and on what services. Carrier billing such as Bango’s Payment Platform provides a simple way for consumers to purchase digital content and paves the way for a trusted experience. Meanwhile Etisalat’s recently introduced data bundles, Smartpaks, simplifies the pricing around mobile apps and streaming in a way that is immediately understood by African consumers. Accelerating the growth of the mobile ecosystem in Nigeria and beyond forms the core of MEF Africa’s Steering Committee and its ongoing work in the region to drive sustainability in the ecosystem. The latest meeting explored the recent changes proposed by the Nigerian regulator NCC on VAS regulation (see the Everything You Need To Know about...section in this eBulletin) and gathered member views on how to respond whilst offering inputs into MEF’s roadmap for the year ahead to drive sustainable business models and guidance for companies entering new markets on the continent. If you would like to join MEF Africa Steering Committee and help shape the evolution of African ecosystem, then please contact the MEF team to learn more. I hope you enjoy this second edition of the Africa eBulletin covering a broad range of topics including an in-depth interview with MEF member Huawei looking at how reducing friction is essential to introducing the next level of mobile services to consumers in Nigeria, as well as a fascinating look at how Mahindra Comviva partnered with Econet in Zimbabwe to launch the EcoCash mobile money service which is driving mass financial inclusion. You’ll also find regular eBulletin features including market stats and the quarterly news round-up from across the region courtesy of AppsAfrica, demonstrating once again how this exciting mobile economy is shaping up in one of the world’s fastest growing and dynamic mobile markets.


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BUILDING MUSIC REVENUES IN NIGERIA

BY REDUCING FRICTION AROUND MOBILE DATA COSTS

igeria has a flourishing music scene. But, thanks to rampant piracy, its musicians don’t make the money they deserve. Now, MTN’s and Huawei’s Music+ service is giving Nigeria’s music-mad population a viable alternative to cheap illegal CDs. MEF’s Feature Editor Tim Green recently interviewed the service’s marketing manager Ebere Nzewi.

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INTERVIEW WITH EBERE NZEWI MARKETING MANAGER AT HUAWEI NIGERIA

Late in 2015, MTN and Huawei launched the Music+ NextRated campaign. The big idea was to encourage unsigned Nigerian artists to upload their tracks to MTV’s growing music download and streaming channel. And, in so doing, to the 1.6m active subscribers using MTN Music+ at the time. The initiative was not just about boosting awareness of the MNO’s music channel and giving unsigned artists unprecedented publicity. It was also yet another strike against the piracy that is holding back an otherwise flourishing local music scene.

“PIRACY IS STILL A BIG PROBLEM HERE. WE ARE DOING OUR BEST TO OFFER A LEGAL ALTERNATIVE THAT’S EASY FOR PEOPLE TO FIND, AND AFFORDABLE TO USE.”

According to Nigeria National Bureau of Statistics data reported by the FT, the domestic film and music industries contribute nearly 1.5 per cent to the country’s GDP. The country’s music scene is central to the cultural identity of Nigeria. Meanwhile its movie scene - Nollywood - is the third biggest in the world.

But piracy cuts the potential revenues these sectors could command. It’s rife. In fact, piracy is embedded into the way the industry works. Nigeria is home to influential music blogs, which are linked to the illegal reproduction of CDs that sell in markets for just a few cents. But local artists are caught in a dilemma. They can make significant money from corporate sponsorships once they are well-known. These blogs offer a route to fame. It’s why many artists collude with them. Thankfully, legitimate new services like MTN Music+ - which was built and managed by Huawei - have started a fight back. Ebere Nzewi, content operation and marketing manager for Music+, says: “Piracy is still a big problem here. We are doing our best to offer a legal alternative that’s easy for people to find, and affordable to use. We also use watermarking to identify when songs are illegally copied. But some artists are still releasing songs to the blogs. It’s a cultural thing that will take time to change.”


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MTN Music+ is a subscription based music streaming and download platform. Users can access it through web, mobile web and mobile native app. They can listen to current and trending songs, create playlists, share music, gift music and enjoy offline streaming. New users can try the service out free for a month, then there are three subscriptions options - N100, N300 and N800, all of which roll in a data allowance so users don’t get bill shock.

“INCLUDING DATA IN SUBSCRIPTIONS WAS IMPORTANT. IT MAKES PEOPLE RELAX AND WILLING TO TRY OUT THE APP. WE ALSO CHARGE BY AIRTIME, With 3.3m subs now, MTN Music+ is more than playing its part in offering Nigerian WHICH ENSURES THAT THE musicians a legitimate music option. In fact, it PAYMENT METHOD IS EASY paid over more than N500m in revenues across eight months to local artists. The service AND AVAILABLE also works hard to source exclusive songs such as TO EVERYONE.” Wyclef’s Divine Sorrow (a chart topper) - all of In all facets of the service, MTN and Huawei have worked hard to remove friction. Nzewi says: “Including data in subscriptions was important. It makes people relax and willing to try out the app. We also charge by airtime, which ensures that the payment method is easy and available to everyone.”

which brings added attention to the channel. Now, Huawei is looking to expand the service. It is targeting more operators across more countries and preparing to add more payment options including credit card. The company is also preparing to add more content types, including podcasts.


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TRANSFORMING ZIMBABWE IN TO A CASH-LITE ECONOMY

HOW MOBILE HAS CREATED AN INCLUSIVE FINANCIAL ECOSYSTEM SRINIVAS NIDUGONDI SENIOR VP AND HEAD OF MOBILE FINANCIAL SOLUTIONS AT

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rinivas Nidugondi talks about how mobile money is driving true financial inclusion in Zimbabwe sharing a fascinating case study on EcoCash.

Rewind to 2008 and hyperinflation was wreaking havoc in Zimbabwe. A bottle of Coke could cost ZIM $50 Billion in the morning could sell for over ZIM $150 Billion in the evening – a hike of over 300 per cent. This was what living in Zimbabwe was like in 2008. By 2009 the Zimbabwean Dollar wasn’t worth the paper it was printed on and was soon replaced by the US Dollar (I have a worthless Zimbabwean trillion-dollar note that I’ve kept for posterity). Although the currency shift managed to control the wildly galloping inflation it also gave rise to new problems and challenges, not least the dollarization of the economy wiped out the bank-based savings of millions of Zimbabweans. As a result, people lost trust in banking institutions and turned to informal payment channels. Moreover, with $1 being the minimum currency in use, Zimbabweans experienced an acute coin shortage leading to a “change problem”. Fast forward to 2015 and the African country’s economy is rebounding, the change problem has been marginalized and financial inclusion is a reality for millions of Zimbabweans. A key driver of transformation is EcoCash, Zimbabwe's first and most prominent mobile money service.

EcoCash extended individual savings to group savings by introducing Savings Club, a mobile-based group savings scheme that can be initiated by any EcoCash user who can invite participants to join and make safe and seamless fund transfers via SMS.

“ECOCASH HAS HAD A REALLY POSITIVE the service is aimed at smaller IMPACT ON ZIMBABWEANS. Crucially (previously unbanked) groups like the self-employed, informal sector THE WAY THAT ALL THE entrepreneurs, street vendors and STAKEHOLDERS – women’s groups. A small farmer in need of some capital for buying CONSUMERS, MERCHANTS, seeds or an expectant mother in ECONET AND STEWARD need of financial support while her baby is on the way are typical BANK – HAVE COMMITTED TO use-cases. IT IS A GREAT EXAMPLE OF In this way, EcoCash is driving socio-economic benefits and laying a WHAT CAN BE strong economic base by mobilizing small deposits from the financially excluded. Prior ACHIEVED.”

Launched in 2011, by Econet Wireless, Zimbabwe's leading mobile operator, and based on Mahindra Comviva’s mobiquity® Money platform, EcoCash has grown as a viable alternative to cash for millions of Zimbabweans.

to EcoCash Save and Saving Club that cash might as well have been (and often was) kept under a mattress.

It started out by letting users pay each other with a simple text or USSD message. But in time, it acted as a springboard to more ‘conventional’ financial services to support people looking to save, borrow or transfer money. EcoCash introduced EcoCash Save, a mobile-based savings service that allows customers to save money and earn interest. Unlike traditional banks which require multiple prerequisites for opening an account, EcoCash Save does not require any documentation, opening balance or maintenance fee. To operate the service, customers need to transfer money from EcoCash Wallet to EcoCash Save account to deposit the money and vice versa to withdraw the money. Everything from account opening to deposits and withdrawals is done via mobile. EcoCash also offer credit service, EcoCash Loans, which provides low-value short-term zero collateral loans instantly via mobile phone.


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Taking that a step further, in 2015, Mahindra Comviva worked with Econet Wireless and MasterCard to issue debit cards to users of the EcoCash Wallet. It was the largest rollout of secure EMV Chip and PIN payment cards in Zimbabwe, and the first time that MasterCard debit cards were made available to consumers using mobile money services in Africa. The move brought unbanked consumers into the world of traditional payment services delivering multiple benefits. For example, it lets consumers pay conveniently at point-of-sale terminals in-store, withdraw cash at ATMs as well as shop online. Today, EcoCash is used by more than 5.795 million Zimbabweans according to a report from the telecoms regulator POTRAZ. In Econet’s 2015-16 financial report, EcoCash was recorded as having handled $6.6 billion worth of transactions. And now, The Reserve Bank of Zimbabwe has indicated that it wants cashless transactions to account for 80 per cent of all transactions by 2021. Currently, they represent 20 per cent. What’s interesting is how the EcoCash example has effectively expanded the mobile money model in two important directions. Firstly, it doesn’t just depend on the transfer of funds between individuals (or via an agent for cash-out) rather it includes bill and merchant payments as well as savings and borrowing, which extends the financial dynamics of the service and the benefits to its users. Moreover, the value-chain is greater than the sum of its parts, including consumers, agents, merchants, Econet Wireless and Steward Bank. Secondly, EcoCash has broken out of the singular approach of just using a mobile device as the transaction bearer. By providing and linking bank-cards to each account holder, EcoCash extends the opportunity for users to buy goods online, withdraw cash at ATM’s or buy goods via point-of-sale machines in stores. In other words the introduction of the EcoCash service is stimulating new areas of commerce in the country.


Mahindra Comviva is now helping many operators to look beyond payment and launch into insurance, loans, savings and so on. You don’t need interoperability for these products to work and users love these services because they drastically reduce paperwork, and are available to millions of people who would otherwise simply not be able to save or borrow.

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REGIONAL NEWS ROUND UP

FROM ACROSS SUB-SAHARAN AFRICA IN PARTNERSHIP WITH APPSAFRICA ADVISORY

MOBILE MONEY WHY VODACOM M-PESA FAILED IN SOUTH AFRICA Despite its renowned success in East Africa, Vodacom is pulling the plug on M-Pesa in South Africa with the country’s advanced banking sector and a lack of demand cited as key reasons for the lack of success of Vodacom’s mobile money product M-Pesa, says a local analyst.

MTN Money Wallet. The agreement launches sub-Saharan Africa’s first operator to operator cross border remittance channel.

Vodacom has announced that it plans to shut down “Our partnership is not only business to business, but also to country the service from June 30 to country,” Econet Wireless COO Fayaz King told the gathering at 2016. When M-Pesa first launched in South Africa in 2010, Vodacom Meikles Hotel, where EcoCash general manager Natalie Jabangtargeted reaching 10 million local users. But only 76,000 users we-Morris and Zambian counterpart Wane Ng’ambi of signed up in 2015 according to the company’s integrated MTN officially signed the partnership. report. This contrasts dramatically with Kenya where mobile network Safaricom has over 11 million “MEANWHILE According to Econet Wireless, someone in Zambia M-Pesa users. will send money by registering with MTN IN KENYA MOBILE Zambia and then initiating a money transfer Around 75 per cent of South Africa’s adult MONEY SERVICES ARE request via a USSD mobile Money short code, population is banked with traditional and selecting EcoCash (ZW) mobile number. financial institutions, according to a recent THE KEY FINANCIAL survey by the FinMark Trust. Meanwhile in Econet Wireless CEO Doug Mboweni has INCLUSION DRIVER. Kenya mobile money services are the indicated that the telecom giant plans to country’s main financial inclusion driver. MOBILE MONEY extends the service, saying Zimbabweans Mobile money account ownership hovers at from more countries with MTN footprint will ACCOUNT OWNERSHIP around 60 per cent. South Africa also has a soon be able to remit money directly into the thriving money transfer market via retail HOVERS AT receiver’s EcoCash wallet. chains such as Checkers.

AROUND 60%.”

“Vodacom is fully committed to mitigating any inconvenience to customers impacted by the decision and assures all M-Pesa South Africa customers that their funds remain safe and readily accessible,” said Vodacom CEO Shameel Joosub.

MTN & ECOCASH PARTNERSHIP ENABLES WALLET-TO-WALLET TRANSFERS ACROSS BORDERS EcoCash and MTN Zambia have officially unveiled a remittance partnership that will enable MTN customers in Zimbabwe’s northern neighbour to send money into the country via the mobile platform


FINTECH START-UP ZOONA PROCESSES $1BN IN TRANSACTIONS South African Fintech start-up Zoona has announced it has processed over US$1 billion in money transfers, bill payments and other financial services through its network of entrepreneur agents. The Zoona platform enables entrepreneurs to provide mobile money services to unbanked or underbanked consumers, with its agents serving more than one million customers every day across close to 1,500 locations in Zambia and Malawi.

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The start-up said its network of agents fulfils an important purpose in emerging markets where financial inclusion rates are low and there are few ways to safely send and receive money. “As an African business that came up with an African solution to an African problem, we’re thrilled to reach this milestone. It’s a vindication and vote of confidence from our consumers – who have chosen to trust us when sending and receiving money. We are immeasurably grateful for this trust,” said Lelemba Phiri, Zoona’s chief communication officer.

FACEBOOK WAKES UP TO NIGERIA BUT IS FREE BASICS ENOUGH? In a partnership with Airtel, subscribers in Nigeria will be able to access all the services that are available through Free Basics without paying extra for data charges or rental. The service will launch in Nigeria with more than 85 free services dedicated to health,

Phiri said the strength of the Zoona model rests in its over-the-counter approach, which means customers do not need to open an account, complete any paperwork, or even have a mobile phone in order to benefit from mobile money.

GHANA: MOBILE MONEY IN TRANSACTIONS HIT GHC35.4BN (USD9BN) The penetration of mobile money in Ghana has seen an astronomical rise for the fourth year running with last year’s value of transaction reaching GHC35.4billion, an increment of more than 216 percent over the previous year according to the Business & Financial Times. In 2014, the three telecom operators (Airtel, Tigo and MTN) engaged in mobile money processed transactions worth about GHC11.2billion across the country. Last year’s transactional value was recorded on the back of more than 260 million transactions in a market that has since seen a new entrant in the form of Vodafone Cash, powered by the mobile operator.

CONTENT & SERVICES SOUTH AFRICA SET FOR MOBILE DATA BOOM South Africa is set for a mobile data explosion, with mobile data traffic growing nine-fold at a compound annual growth rate of 55 per cent by 2020 according to the 10th Annual Cisco Visual Networking Index. The report relies upon independent analyst forecasts and real-world mobile data usage studies. According to the report, in South Africa, 63 per cent of mobile connections will be ‘smart' connections by 2020, up from 22 per cent in 2015. Cisco notes mobile video will have the highest growth rate of any mobile application predicting video will be 73 per cent of mobile data traffic by 2020, compared to 52 per cent at the end of 2015. Consumer and business users' demand for higher video resolution, more bandwidth and processing speed will increase the use of 4G connected devices, it notes, adding 4G connectivity share is projected to surpass 2G by 2018 and 3G by 2020. The report also anticipates machine-to-machine (M2M) traffic in SA will grow 24-fold from 2015 to 2020 to account for 8% of total mobile data traffic by 2020, compared to 3 per cent at the end of 2015.


education, jobs, and finance. To date, Facebook estimates that its connectivity efforts, which include Free Basics, have brought more than 25 million people online who wouldn’t be otherwise. With the cost of mobile data still an issue for subscribers Airtel Africa will also be offering Facebook Flex in Nigeria, which allows people to access a version of Facebook without data charges. According to Facebook, this initiative is part of their commitment to bringing people online and reducing affordability barriers. Zuckerberg references Olalekan Elude, Ayodeji Adewunmi and Opeyemi Awoyemi from Jobberman, a successful online recruitment platform. “Free Basics offers Nigerians, including 90 million people who are currently offline, the opportunity to access services like Jobberman.”

VODACOM BETS ON INTERNET OF THINGS. REVENUE FROM IOT GROWS 20.7 PER CENT TO R556 MILLION Vodacom has over 2.2 million SIM cards in "machines or things", which are not mobile phones, and the company sees big revenue potential in this market as the Internet of things (IOT) grows in South Africa. "I think we are going to be surprised at the level of innovation that will come into play in the IOT space," CEO Shameel Joosub told ITWeb in an interview after the telecom operator's financial year-end results presentation in Johannesburg yesterday. Joosub says IOT is one of three new growth pillars Vodacom is focusing on to capture new revenue streams. "If you look at it today, you have 2.2 million SIMs in machines in South Africa. That's just Vodacom's SIMs. If you take the entire industry, it's probably around four million or five million SIMs and that is growing at around 25 per cent a year, so it's a very rapidly expanding market," explains Joosub.

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GHANA INITIATES REVIEW OF OTT SERVICES Ghana's National Communications Authority says it is reviewing the country's OTT market with a plan to make decisions for an enabling regulatory environment - not only because of the impact on the revenue streams of telecom operators that fulfil their tax obligations, but for national security concerns. The Authority is concerned with the fact that most of these OTT players are generally not bound by regulations in many countries which orients market dynamics in their favour. “OTT players are currently not under the purview of the telecom regulations in the country as they are not registered or recognised operating agencies under International Telecommunications Regulations," the statement continues. "The lack of national regulations also poses a threat to security and safety because of the very nature of the communications sector.”

SHOWMAX LAUNCHES IN 36 AFRICAN COUNTRIES Internet video streaming service ShowMax has switched on its service in 36 African countries since it launched in South Africa in August 2015, months before rival US streaming service Netflix switched on its global service in January this year. ShowMax spokesperson Richard Boorman confirmed to Fin24 that the service is now live in 36 African countries ranging from Botswana in the south to Ethiopia and Djibouti in the north although is notably not available in two of Africa’s biggest economies: Nigeria and Egypt. It’s unclear if ShowMax has plans to launch in Nigeria, but Boorman told Fin24 that the company is undergoing a “phased roll-out”.

SOCIAL MEDIA SERVICES CUT IN ETHIOPIA Applications including WhatsApp and Twitter have not worked in parts of Ethiopia for more than a month due to a “blackout targeted at mobile data connections”, according to local users speaking to Bloomberg. The services, also including Facebook Messenger, have been unavailable on the country’s sole mobile network Ethio Telecom, claimed the publication’s sources. Among the regions affected include Oromia, which recently suffered fatal protests, leading to the death of 266 demonstrators according to reports. A Government spokesperson has reportedly said restricting access isn’t a policy, and put the issue down to possible connection problems. However, Andualem Admassie, chief executive of state-owned Ethio Telecom, reportedly told Ethiopia’s daily newspaper Capital that the government has the technology “to control” messaging applications, earlier this month.

UBER LAUNCHES IN TWO NEW AFRICAN CITIES On-demand transportation service Uber has launched in two new locations, Abuja, Nigeria, and Mombasa, Kenya. This brings the company’s global network to 400 cities in 70 countries. The service launched in Lagos in 2015, but is only now coming to Nigeria’s capital city. “We’re really excited to be launching Uber in these two great African cities, providing locals and visitors with a safe, affordable and flexible choice to move around their city.” said General Manager of Uber SSA, Alon Lits.


TERRAGON GROUP PARTNERS WITH BLIPPAR TO BRING AUGMENTED REALITY TO AFRICA Under the terms of the deal Terragon will now offer a range of Augmented Reality solutions to its customer base of pan-African brands and businesses. Moreover, the AR technology enables campaigns where consumers can view additional engaging branded content on any object or surface by using the Blippar app in conjunction with a smartphone camera (Blipping) and visual tags on things like magazine or outdoor advertising. To announce its AR capabilities, Terragon has launched a social media campaign (#BlippNaija) urging consumers to download the app and Blipp a N1000 note (amongst other every-day objects) to access amazing additional content and to share their experiences using the #BlippNaija hashtag. Temitope Esan, Product manager, AR, Terragon Group, said: “The opportunities for AR are endless to any organization as it seeks to enhance our real world experience. By superimposing digital information on real life objects, individual customers are given a personalised and rich user experience that enables them to easily connect to a brand’s offerings. With the use of AR, brands have an in-depth understanding of their customer behaviour that will increase affinity, user engagement and interaction with their various product/service offering."

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ESKIMI PROGRAMMATIC DSP PLATFORM LAUNCHES NEW DATA MANAGEMENT CAPABILITY Mobile media company, Eskimi (which includes the mobile social network, Eskimi) has raised the bar for marketing quality in Nigeria by introducing a new local DMP - data management platform which will allow advertisers to target specific audiences instead of just sites and apps. Currently the Eskimi DSP platform reaches more than 37 million active users on Nigeria through more than 5 billion page impressions across 19,000 mobile websites and apps. The addition of the new data management capability allows advertisers to target much more specifically so that a beer brand can target only alcohol consuming audience or a mobile operator striving to reach high-value users, can target only users who belong to the TOP 10 per cent of data consumers for example.

VODACOM OVERTAKES MTN AS THE HIGHEST VALUED AFRICAN TELCO According to Bloomberg data MTN's market cap was ZAR236 billion (USD15 billion), straggling behind Vodacom's ZAR248 billion worth. It's been a tough six months for MTN, which is still facing a $3.9 billion (ZAR59 billion) fine in Nigeria for missing a deadline to disconnect 5.1 million unregistered SIM cards. MTN's share price has slumped almost 33 per cent from ZAR190 a share to ZAR128.05. MTN's market cap has lost ZAR114 billion since the fine was made public. Vodacom however, seems to be going from strength to strength. The telco's stock has grown by 9.5 per cent year-to-date and almost 20 per cent in the last 12 months. In terms of subscriber numbers, MTN is still by far the biggest telco, with 229 million subscribers across 22 operations in Africa and the Middle East. As of 31 December, Vodacom had 65.2 million across its five African operations.

Vytas Paukstys, CEO of Eskimi, commented: "We are launching a piece of technology that was missing in the Nigerian market - local data platform. This will allow advertisers to target very specific audience instead of relying on their perception of certain sites or apps. An advertiser can target by age, location and gender in sites and apps where it was not possible before."

MOBILE OPERATOR NEWS ORANGE INVESTS €75 MILLION IN AFRICA INTERNET GROUP Africa Internet Group, the largest e-commerce platform in Africa and parent company of Jumia, has announced a partnership with Orange to accelerate the growth of the company and seize development opportunities on the continent. In line with the partnership, Orange – one of the leading telecommunication operators in Africa – will make a EUR75 million equity investment in Africa Internet Group. This follows hot the heels of AXA’s 75 million euros investment for an 8 percent stake in Africa Internet Group (AIG). Orange will become a shareholder of Africa Internet Group alongside existing shareholders MTN, Rocket Internet, Millicom, AXA and Goldman Sachs. Jumia has built a strong presence in several key African markets where it will now be able to further improve its offering and customer experience thanks to this partnership, in particular in key countries such as Morocco and Egypt.


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MARKET SNAPSHOT: MOBILE MESSAGING USAGE IN NIGERIA AND SOUTH AFRICA Just like the rest of the world, chat apps are rapidly evolving in parts of Africa to become the preferred platform for person-to-person messaging. However, unlike the rest of the world, much of the continent has a majority legacy of feature phone users and mobile infrastructure that is gradually upgrading to 3G and 4G speeds (a requirement for the use of chat apps). MEF’s Mobile Messaging Report supported by Mblox launches later this month. The report is part of MEF’s Mobile Messaging Programme: Future of Messaging which looks at combatting fraud and market development in A2P Messaging. Below we’ve exclusively previewed some of the findings on the African countries included in the nine market study which looks at the consumer attitudes and behaviours when in comes to mobile messaging. It show how SMS compares against messaging apps with WhatsApp topping the usage charts in both countries with 82% in South Africa and 73% in Nigeria. Facebook Messenger and SMS are also in the top three with Blackerry’s BBM remaining strong for now at least in Nigeria (44%). SMS dominates Application 2 Person messaging (A2P) – where businesses communicate with consumers. Mobile messaging is widely adopted by enterprises in both markets for mission critical use cases like dialogue with banks, authenticating passwords and so forth as well as a marketing channel for brands. In South Africa for example 38% have used SMS to confirm a password and 34% have used SMS to check their bank balance whilst in Nigeria its 49% and 42% respectively. 73%

NIGERIA – FAVOURITE MESSAGING SERVICES 62%

61%

47%

44%

22%

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WHICH SERVICES & APPS DO YOU USE REGULARLY TO SEND OR RECEIVE DIRECT MESSAGES WHICH ONE SERVICE OR APP DO YOU USE THE MOST

82%

SOUTH AFRICA – FAVOURITE MESSAGING SERVICES

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WHICH SERVICES & APPS DO YOU USE REGULARLY TO SEND OR RECEIVE DIRECT MESSAGES WHICH ONE SERVICE OR APP DO YOU USE THE MOST


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MEF AFRICA EDITION #2 SMS

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SC H

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UN O IV CT ER EA OR SI LT /H TY BA H O CA SP NK RE IT A O PR L R O AC OR TH TI OT ER TI H O E fiN NE R A R AN NC I AI AL A RL I CO N IN ST E, M IT PA TA UT NY XI IO O N YO R A TR U CO H AI AV M N PA E CO O NY M RD PA CO ER NY Nfi ED RM SO IN M G ET AN H IN AP G A PO CO FR IN O M TM M PA EN NY T PR O G R O O M BO VE O O TI RN KI NG M NG EN G O T O D D EP S AR O R TM SE EN RV T IC O ES R LO CA L AU TH A O SP RI O TY RT A W S EB O R SI SO TE CI O AL R EM CL AI UB L SE RV IC E PR O VI D ER YO UR

YO UR

YO UR

YO UR

SMS

NO

R O UN CT IV O E ER YO AL R/ SI UR TH HO TY CA SP BA RE IT NK AL PR O R AC OR O TI OT TH TI H ER O E NE R fiN R A AN NC IA AI A L R LI IN CO NE ST M ,T IT PA UT AX NY IO IO N YO R A TR U CO H AI AV M N PA E CO O NY M RD PA CO ER NY Nfi ED RM SO IN M G ET AN H IN AP G A PO CO FR IN O M TM M PA EN NY T PR O G R O O M BO VE O O TI RN KI NG M NG EN G O T O D D EP S AR O R TM SE EN RV T IC O ES R LO CA L AU TH A O SP RI O TY RT A W S EB O R SI SO TE CI O AL R EM CL AI UB L SE RV IC E PR O VI D ER

YO UR

YO UR

YO

NIGERIA – ENTERPRISES USING A2P MESSAGING IN THE LAST 12 MONTHS, HAVE YOU RECEIVED A TEXT MESSAGE (SMS) TO ONE THE FOLLOWING COMPANIES OR INSTITUTIONS - OR SENT OR RECEIVED A MESSAGE VIA ONE OF YOUR MESSAGING APPS?

50% APP

24% 31%

20% 8% 14% 18% 8%

SOUTH AFRICA - ENTERPRISES USING A2P MESSAGING

IN THE LAST 12 MONTHS, HAVE YOU RECEIVED A TEXT MESSAGE (SMS) TO ONE THE FOLLOWING COMPANIES OR INSTITUTIONS - OR SENT OR RECEIVED A MESSAGE VIA ONE OF YOUR MESSAGING APPS?

32% 29% 25%

20%

35%

26%

5% 9%

12%

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NIGERIA – A2P MESSAGING USE CASES IN THE LAST 12 MONTHS HAVE YOU SENT AN SMS OR MESSAGE FROM WITHIN AN APP TO DO THE FOLLOWING?

SMS

APP

45% 34% 33% 22%

19%

22% 17%

14% 7%

6% MAKE A CHARITY DONATION

MAKE A MAKE A PAYMENT TO PAYMENT TO FRIENDS & A COMPANY FAMILY

SET UP AN ACCOUNT

CONFIRM A PASSWORD

7%

6%

11% 6%

CONFIRM OR CONFIRM A CHECK YOUR CHECK THE ORDER PROVIDING DONATE CANCEL A CREDIT CARD BANK STATUS OF A GOODS AND INFORMATION INTERNET TIME BOOKING TRANSACTION BALANCE OR BUS, TAXI, SERVICES TO A TO FRIENDS CREDIT LIMIT AIRLINE COMPANY OR FAMILY

OTHER

NONE OF THESE

SOUTH AFRICA – A2P MESSAGING USE CASES IN THE LAST 12 MONTHS HAVE YOU SENT AN SMS OR MESSAGE FROM WITHIN AN APP TO DO THE FOLLOWING?

SMS

APP

36% 29% 27% 28%

15% 11%

8%

6% MAKE A CHARITY DONATION

MAKE A MAKE A PAYMENT TO PAYMENT TO FRIENDS & A COMPANY FAMILY

SET UP AN ACCOUNT

CONFIRM A PASSWORD

VERSION 1.0


9%

9%

9% 5%

CONFIRM OR CONFIRM A CHECK YOUR CHECK THE ORDER PROVIDING DONATE CANCEL A CREDIT CARD BANK STATUS OF A GOODS AND INFORMATION INTERNET TIME BOOKING TRANSACTION BALANCE OR BUS, TAXI, SERVICES TO A TO FRIENDS CREDIT LIMIT AIRLINE COMPANY OR FAMILY

NETWORK A2P MESSAGING FRAUD FRAMEWORK

13%

11%

MARKET

ENTERPRISE

OTHER

NONE OF THESE

CONSUMER

THE FUTURE OF MOBILE MESSAGING: A CROSS-ECOSYSTEM APPROACH

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EVERYTHING YOU NEED TO KNOW ABOUT… THE NCC CONSULTATION FOR THE PROVISION OF VALUE ADDED SERVICES IN NIGERIA

I

n March 2016 the Nigerian Communications Commission (NCC) published a consultation paper on the Procedures and Guidelines for the future provision of Value Added Services in Nigeria. Its goal is to make sure that consumers are properly protected.

The proposals were broad, impacting all stakeholders directly and included the introduction of a new structure for the VAS value chain, new revenue models, proposals related specifically to the activities of the mobile operators as well as attempts to address the issue of unauthorised billing and delivery of unsolicited SMS, which is currently a big problem in Nigeria. MEF has been supporting its members with a response to the consultation, highlighting best practice and experiences from other markets. It recommends that positive engagement and full industry collaboration is the best way to proceed with any new regulation in order to create an effective regulatory regime that will protect consumers from harm, but one that will also enable the market to continue to develop and grow, to the benefit of the wider Nigerian economy. Here, we take a deeper look at the proposal which could have a significant impact on future mobile ecosystem in this key African market.

BACKGROUND TO THE CONSULTATION The NCC was established by the Nigerian Federal Government as an independent regulatory authority for the telecommunications industry in Nigeria. The Nigerian Communications Act (NCA) also confers on the NCC the responsibility to control and regulate other related services offered in addition to the basic voice communications; these include data services, Internet and other value added services. The NCC has up to this time allowed the value added services industry to develop without any encumbrance or significant regulatory interference. The VAS industry in Nigeria has grown into a multi-billion Naira industry and become an enabling tool for facilitating efficient operations in other sectors of the economy. The Commission cites having received several complaints from the public in respect of service providers who use short codes assigned for value added services to perpetuate fraud, the menace of unsolicited text messages that flood customers’ phones, fake bank credit alerts and anti-competitive activities. As such the Commission is now of the opinion that it is time to regulate the industry in order to protect, balance and reconcile stakeholders’ interests and has developed a set of regulatory guidelines and opened a public consultation.

MOBILE EDITION MONEY eBULLETIN #3 MEF AFRICA #2

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PROPOSED GUIDELINES The consultation includes three key areas and covers a wide range of proposals that have a direct impact on the providers of VAS services as well as mobile messaging. 1. 2. 3.

Regulatory Guidelines Technical Guidelines Draft VAS Hosting Service license

The consultation includes proposals on: •

A new market structure consisting of three parties within the VAS value chain namely: 1) VAS and content developers [owners of franchise and copyright on applications and content] 2) VAS hosting service providers [providers of software and hardware platforms for hosting VAS and providing transmission links to network operators] 3) Network operators [providers of connections to end users for VAS connection]

•

Specific functions and responsibilities assigned to each party as well as restrictions on the provision of certain types of services by some parties [e.g. only operators are allowed to provide ringtones, callback ringtones, Cell-ID dependant locations based services.

•

Separation of mobile subscribers’ voice, data and VAS accounts. For pre-pay customers which is most of the Nigerian subscriber base, this means that consumers have to decide at the point of topping up how much of their top up is allocated to voice, data and VAS

•

The requirement that both the sender and provider (aggregator) must be identified within bulk SMS

•

Unbundling of the product selling price and weighted segmentation of different components that make up a total selling price, e.g., development costs = 40%, distribution costs = 10%, branding & advertising = 15% etc

•

New VAS franchise/distribution models and revenue collection models

•

Development of a code of practice for consumers which would cover service information, complaints handling, T&Cs etc.

CONSULTATION PAPER PUBLISHED 15/16 MARCH 2016 MEF RESPONDED ON BEHALF OF MEMBERS 6 APRIL 2016 NCC HELD AN INDUSTRY STAKEHOLDER MEETING ON 27 APRIL 2016 FURTHER UPDATES ON THE CONSULTATION ARE NOW AWAITED


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STATS THAT OUTLINE THE MARKET DRIVERS IN THE REGION HERE WE LOOK AT THE STATS BEHIND THE HEADLINES THAT INDICATE SOME OF THE KEY MARKET DRIVERS ACROSS AFRICA. MOBILE DATA REVENUE IN AFRICA IS EXPECTED TO DOUBLE BY 2019, FROM ABOUT $11 BILLION 2014 TO $22 BILLION ACCORDING TO REPORT LINKER.

1

2

CISCO’S TENTH ANNUAL VISUAL NETWORKING INDEX SUGGESTS THAT SOUTH AFRICA IS SET FOR A MOBILE DATA EXPLOSION, WITH TRAFFIC GROWING NINE-FOLD AT A COMPOUND ANNUAL GROWTH RATE OF 55% BY 2020.

3

THE SAME REPORT INDICATES THAT 63% OF MOBILE CONNECTIONS WILL BE ‘SMART' CONNECTIONS BY 2020, UP FROM 22% IN 2015. THERE IS AN ESTIMATED 800 MILLION INHABITANTS IN SUB-SAHARAN AFRICAN AND 386 MILLION MOBILE SUBSCRIPTIONS TRANSLATING TO A POPULATION PENETRATION RATE OF 41% AND AN ANNUAL SUBSCRIBER GROWTH RATE OF 14% ACCORDING TO DETECON CONSULTING.

4

IN TERMS OF HANDSET SHIPMENTS TO THE END OF 2015, AFRICA AND THE MIDDLE EAST ACCOUNTED FOR AN 11% SHARE OF THE GLOBAL HANDSET MARKET - THE SECOND BIGGEST REGION GLOBALLY BEHIND ASIA PACIFIC AND A TRAJECTORY THAT STRATEGY ANALYTICS PREDICTS WILL CONTINUE THROUGHOUT 2016.

5

ANALYSYS MASON FORECASTS THAT SMARTPHONES WILL ACCOUNT FOR 63% OF ALL HANDSET SALES IN SUB-SAHARAN AFRICA BY 2020.

6


THE AVERAGE SELLING PRICE OF SMARTPHONES HAS FALLEN SIGNIFICANTLY ACROSS AFRICA WITH MORE DEVICES NOW AVAILABLE IN THE SUB-$100 PRICE RANGE. YET, ACCORDING TO THE

7

GSMA DESPITE THIS SHIFT, NEARLY 450 MILLION CONNECTIONS WILL STILL BE BASED ON FEATURE PHONES BY 2020.

8

THE TOP FIVE AFRICAN COUNTRIES BY INTERNET USE (IN MILLIONS) ARE: NIGERIA - 97.21 (POPULATION 173.6M) EGYPT – 48.3 (POPULATION 82.6M) KENYA – 31.99 (POPULATION 44.35M) SOUTH AFRICA – 26.84 (POPULATION 52.98M) MOROCCO – 20.21 (POPULATION 33.01M)

DATA FROM THE CENTRAL BANK OF KENYA SHOWS THAT MOBILE MONEY TRANSFER SERVICE PROVIDERS MOVED CLOSE TO 2 TRILLION KENYAN SHILLINGS ($23 BILLION) VIA 733 MILLION TRANSACTIONS LAST YEAR. THAT WAS UP FROM 579 MILLION TRANSACTIONS WORTH 1.5 TRILLION SHILLINGS IN 2012.

9

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THIS IMF REPORT ON KENYA, INDICATES THAT MOBILE MONEY PROVIDER M-PESA HAS A PENETRATION RATE OF 985 REGISTERED MOBILE MONEY ACCOUNTS PER 1,000 PEOPLE CREATING EMPLOYMENT FOR SOME 80,000 AGENTS.

10

ERICSSON’S STUDY ‘FINANCIAL SERVICES FOR EVERYONE’ FOUND THAT MORE THAN HALF OF CONSUMERS IN SUB-SAHARAN AFRICA ARE USING MOBILE MONEY SERVICES THROUGH AN AGENT.

11

ACCORDING TO CISCO VIDEO WILL HAVE THE HIGHEST GROWTH RATE OF ANY MOBILE SERVICES. IN SOUTH AFRICA FOR EXAMPLE, VIDEO WILL BE 73% OF MOBILE DATA TRAFFIC BY 2020, COMPARED TO 52% AT THE END OF 2015.

12

NIGERIANS ARE CONSUMING MORE OF THEIR TV AND VIDEO CONTENT ON MOBILE DEVICES THAN EVER BEFORE ACCORDING TO ERICSSON CONSUMERLAB’S TV AND MEDIA REPORT FOR NIGERIA. THE

13

SHARE OF TIME SPENT WATCHING VIDEO BREAKS DOWN AS: TV (36%) PC (25%) SMARTPHONE (26%) TABLET (13%). TAKEN TOGETHER SMARTPHONE AND TABLET OUTWEIGH ANY OTHER CATEGORY.

14

IN 2014, 100 MILLION PEOPLE WERE USING FACEBOOK EACH MONTH ACROSS AFRICA, WITH OVER 80% DOING IT VIA MOBILE. BY THE END OF 2015 THAT FIGURE HAD JUMPED TO OVER 120 MILLION. 4.5 MILLION OF THOSE FACEBOOK USERS ARE BASED IN KENYA, 15 MILLION IN NIGERIA AND 12 MILLION IN SOUTH AFRICA, IN STATISTICS REPORTED BY REUTERS.

15

SOUTH AFRICAN INTERNET USERS SPEND 24.7% OF THEIR INCOME ON MOBILE SERVICES (DATA AND VOICE). ELSEWHERE, THE THREE MOST EXPENSIVE COUNTRIES IN TERMS OF MOBILE SERVICES SPEND VERSUS AVERAGE MONTHLY INCOME ARE: MALAWI – 56.29% MADAGASCAR – 52.55% CENTRAL AFRICAN REPUBLIC – 51.63%


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ABOUT HUAWEI Huawei is a leading global information and communications technology (ICT) solutions provider. Our aim is to enrich life and improve efficiency through a better connected world, acting as a responsible corporate citizen, innovative enabler for the information society, and collaborative contributor to the industry. Driven by customer-centric innovation and open partnerships, Huawei has established an end-to-end ICT solutions portfolio that gives customers competitive advantages in telecom and enterprise networks, devices and cloud computing. Huawei’s 170,000 employees worldwide are committed to creating maximum value for telecom operators, enterprises and consumers. Our innovative ICT solutions, products and services are used in more than 170 countries and regions, serving over one-third of the world’s population. Founded in 1987, Huawei is a private company fully owned by its employees.

For more information, please visit www.huawei.com

ABOUT MAHINDRA COMVIVA Mahindra Comviva is the global leader in providing mobility solutions. It is a subsidiary of Tech Mahindra and a part of the USD 16.5 billion Mahindra Group. With an extensive portfolio spanning mobile finance, content, infotainment, messaging and mobile data solutions, Mahindra Comviva enables service providers to enhance customer experience, rationalize costs and accelerate revenue growth. Its mobility solutions are deployed by over 130 mobile service providers and financial institutions in over 90 countries, transforming the lives of over a billion people across the world.

For more information, please visit www.mahindracomviva.com

ABOUT APPSAFRICA ADVISORY Appsafrica Advisory develops strategies and drives expansion for companies entering or expanding in Sub-Saharan Africa. We are a private advisory service providing expert insight, business development and implementation assistance for mobile web and technology ventures.

For more information, please visit www.appsafrica.com


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MOBILEECOSYSTEMFORUM.COM

MEF MOBILE MONEY eBULLETIN #3

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