Investing in Africa tip seven: Provide the most relevant content

In a marketplace in which operators are not just fighting for a share of a user’s communications wallet but for a share of that user’s entire spend, it is important that a new operator is able to offer something directly relevant to the addressable market.

The ongoing success of Safaricom’s M-Pesa mobile-money-transfer services in Kenya is perhaps the clearest example of the potential of relevant content, which goes well beyond the communications remit, and directly appeals to the mass market. As the two graphs below show, the service literally changed people’s daily lives.

Only launched in 2007, Safaricom’s M-Pesa service had notched up almost 8 million users and P2P money transfers totalling $3.37bn by end-3Q09, according to the Kenyan operator. As a subscriber acquisition and a retention tool, M-Pesa is proving immensely useful for Safaricom.

This is to be expected, but of more note is the fact that a non-voice service has become a significant revenue generator. Safaricom cited M-Pesa, along with its mobile broadband services, as the main contributors to the strong growth in data revenues that the operator enjoyed in the nine months to end-3Q09. Safaricom’s data revenues increased during the nine months by 93.6 per cent year-on-year and accounted for 17.7 per cent of the group’s total revenues, up from 10.8 per cent in the same period a year earlier.

Much of the success behind M-Pesa lies in the fact that Safaricom was able to build an agreement with the country’s relevant regulatory authorities. But also important was that the operator touched on a local market need – money transfers in a country where there is a large unbanked population. Another factor behind the success of M-Pesa is its simplicity. Users need only have a 2G handset and the system requires nothing more complex than SMS functionality and a PIN code. It is a mass market friendly service, which serves as an important lesson for any operator looking to unearth a new service.

The content itself can also be simple to be effective. Messaging is hugely popular in Africa as evidenced by the success of the South African mobile instant messaging (MIM) service MXit, which has become so popular that MTN and Vodacom have both decided to develop their own MIM services.

Source: Intelligence Centre

So as to join the VAS supply chain, a number of operators have entered into partnerships with a variety of content providers. MTN Uganda’s Google SMS service, for example, is an application that allows users to find information tips on farming and health, as well as more conventional news and sports content.

Partnerships also help to build brand, and so Etisalat Nigeria made its Facebook update service, which allows users to update their Facebook page via SMS and MMS rather than having to connect to the Internet, a key feature of its youth-oriented Easy Cliq plan. Offering certain content services can help operators identify a segment of the market, and the youth market is certainly a valuable one to crack.

Offering the right product portfolio will be a big step for any new investor, both in terms of differentiation and building brand. By providing a relevant service that addresses the local needs of the market, an operator can win over mass market appeal.

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