Q&A with Jignesh Dave, Founder and CEO at Next360

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Christopher Lycett, Portfolio Manager for MVNOs World Congress sat down with Jignesh Dave, Founder and CEO at Next360 to discuss roam free connectivity, African MVNO opportunity and digital banking.

MVNOs: What are some of the key opportunities and challenges for MVNOs in Africa?

Jignesh: The main opportunities lie in:

  • Emerging markets with low smart phone penetration could be an interesting proposition by focusing on reach and penetration, that could yield desired results
  • In a demography where the majority of people have predetermined X amount per day to spend on telecommunications, an MVNO which can piggyback off existing businesses like microfinance, last mile retail and education is an interesting avenue
  • Africa can be a suitable market for MVNOs who are willing to step away from traditional airtime and data reselling

Jignesh: As for the challenges:

  • Razor thin margins with monopolistic market driven by MNOs
  • There is a lack of regulatory framework, unlike the matured markets where MVNOs is a way to prevent monopoly and increase competition
  • Distribution to make services at arm’s reach
  • South African example – forcing users to rely on payment methods like credit cards or contracts in a completely prepaid market with little access to banking. This is brands as big as Virgin struggled to make a mark

MVNOs: MNOs and Banks are launching MVNOs with FinTech – How important is this to MVNO proposition in Africa?

Jignesh: Giant banks like FNB & Standard Bank in South Africa getting the feel of connectivity market with a main goal of retaining clients & offer a value add is slowly but surely making a mark in the industry. Execution and operational optimization being the key ingredient, this could become a very solid ingredient for Africa as a continent.

MVNOs: You are set to speak at MVNOs World Congress 2020 in Berlin in September. What excites you most about the event?

Jignesh: I’m very much looking forward to speaking at MVNOs World Congress and meeting global industry leaders, which could be very useful in terms of experience sharing and collaboration.

This is always a great event to attend, particularly for interacting with MVNOs community which provides a level platform for peers, partners and of course competitors to engage and steer the industry forward. It also gives me an opportunity to keep me up to date with industry updates and “what next” in terms of offerings.

This year I intend to participate with one specific goal – to have an MNO partner especially in the Australian market as that is another important destination to be added as an offering to the global traveller.

In exciting news, Jignesh will be speaking at MVNOs World Congress 2020 in September in Berlin. Find out more about the event here.

Ericsson’s 2020 African growth plans

President of Ericsson Middle East and Africa, Fadi Pharaon, tells Telecoms.com about the group’s strategy for growth on the African continent.

Africa represents a huge growth opportunity for Ericsson — from increased 4G coverage to future 5G rollouts and rising fintech adoption — the company is eager to grow its business and presence on the continent. This according to Fadi Pharaon, President of Ericsson Middle East and Africa, who chatted to Telecoms.com about the group’s strategy for growth on the continent.

  1. What are some of the key African insights to come out of the latest Ericsson Mobility Report?

Africa remains the fastest growing mobile market in the world. According to our Ericsson Mobility Report, by 2025, in Sub-Saharan Africa mobile broadband subscriptions will increase to reach around 70% of mobile subscriptions, with increased 4G coverage and uptake being the main engine. Driving factors behind this shift include a young and growing population and availability of lower priced smart and feature phones.

The continent has emerged as one of the strongest adopters of innovation, with the rapid rise in usage of technology and smartphones. Just look at how mobile money was initiated in Africa and is now surging all over the continent.

Moreover, Africa has come a long way in its digitization journey – from mobile telephony to broadband, and from connecting to digitizing key economic sectors, jobs, education, healthcare, government and society in general.

  1. What do you see as the greatest risk to African economic development, and what role could the telecoms sector play in mitigating this?

The risk is for sure the current slowdown in global trade caused by the COVID-19 restrictions. Add to that the presently depressed oil prices which could affect the GDP of certain oil exporting countries. That said, the continent’s median age is just 21 years. A young and growing African population with savvy digital skills and behavior could offset some of these adverse trends and indicate favorable growth for telecom and ICT services.

The current COVID-19 restrictions have demonstrated the benefits of a digitized economy, facilitating working from home as an example. This could prove to be an opportunity for Africa to accelerate its journey towards raising the role digital and telecom services play in a socio-economical context.

  1. So, knowing both the opportunities and challenges, what is Ericsson’s primary focus in Africa?

Africa represents a world of opportunity for us at Ericsson and we are eager to grow our business and presence in the continent. We see a real potential in African markets when it comes to 4G and fintech adoption. To address that, we focus on supporting our customers in the African markets with relevant and cost-effective 4G solutions and services, all while adapting to Africa’s requirements.

  1. 5G is a hot topic globally. What is the state of 5G roll-out by Ericsson in Africa?

Ericsson is continuously working with our partners to identify and create 5G use cases relevant to the market in question. One of our first major steps towards rolling our 5G in Africa was the announcement in November 2019 that Ericsson had been selected by MTN South Africa as a 5G network modernization vendor. We are still a few years away for any major 5G deployment in Africa, although the application of fixed wireless access, meaning using 5G as a way to offer high speed broadband to homes, could be suitable for those markets.

  1. You’ve previously mentioned that it is important to Ericsson to ‘show value towards customers’. What do you mean by this?

Ericsson focuses on assuring best performing networks, while also offering the best digital services and solutions to our customers. Our aim is to create a unique customer experience evolving from networks adopting automation, artificial intelligence and analytics. One of our focus areas also is reducing time-to-market and flexibility in launching services for our customers towards their subscribers. From an operations perspective, we focus on driving service delivery efficiency through adoption of advanced tools.

  1. Mobile money has historically been very successful in Africa. Does Ericsson have a role to play in this space?

According to a recent study by GSMA, mobile money is central to the mobile industry’s contribution to 15 of the 17 United Nations Sustainable Development Goals. At Ericsson, we have been incredibly proud to see Ericsson’s mobile money services introduced by our customers to several African communities to address challenges faced by unbanked communities. We believe that easy access to Mobile Money can make a tangible difference in the lives of unbanked communities. We will continue our focused growth of mobile financial services so that our service provider partners reach out to more communities across the continent.

  1. You’ve operated in South Africa, and across the continent, for decades now. What success stories can you share with us?

Our work in South Africa is a great success story example. Ericsson has been a proud partner to one of South Africa’s largest mobile network providers since 1994. However, our South African success story is not just a commercial partnership; we believe we have made a tangible difference to South African society. When former President Nelson Mandela called on the private sector for help in developing education in marginalized communities in the 1990s, Ericsson heeded the call and we have been active ever since.

Our Connect-to-Learn program is positively impacting South African girls in schools today. In Diepsloot, a disadvantaged community outside Johannesburg, Ericsson has built an e-hub that brings together entrepreneurs, innovators and society. Just this year, we introduced robotics in the hub. This is what we mean when we say we’re committed to giving back to society.

  1. What role do you play in the area of managed services in the Africa region?

Many of our customers across the globe choose us to run their networks and IT operations on their behalf and that is what we call “managed services”. In Africa, we see a big potential to expand our managed services business across the continent. With an increasing complexity brought by advanced technology, paired with ever higher expectations by the end-users, our managed services could bring to bear all of our global best practices to the service providers’ networks. Proudly we have a large managed services footprint with key customers in Africa such as MTN, Orange, Moov and Airtel. Our investments in managed services will continue and will pave the way for continuous high-performance services to African service providers.

 

— Fadi Pharaon, President, Ericsson Middle East and Africa

Vodafone transfers m-Pesa control over to new joint venture

A joint venture owned by Safaricom and Vodacom has been handed the reigns for money transfer, financing and microfinancing service m-Pesa from Vodafone.

The transaction was first announced in 2019, the aim is to accelerate the growth of m-Pesa by giving both Safaricom and Vodafone-owned Vodacom full control, including product development and support services, as well as decided to which markets it will be expanded to in the future.

Financials for the transactions are unknown, though Safaricom suggested it could be worth about $13 million last year.

“This is a significant milestone for Vodacom as it will accelerate our financial services aspirations in Africa,” said Shameel Joosub, Vodacom Group CEO. “Our joint venture will allow Vodacom and Safaricom to drive the next generation of the M-PESA platform – an intelligent, cloud-based platform for the smartphone age. It will also help us to promote greater financial inclusion and help bridge the digital divide within the communities in which we operate.”

“For Safaricom, we’re excited that the management, support and development of the M-Pesa platform has now been relocated to Kenya, where the journey to transform the world of mobile payments began 13 years ago,” said Michael Joseph, outgoing Safaricom CEO. “This new partnership with Vodacom will allow us to consolidate our platform development, synchronise more closely our product roadmaps, and improve our operational capabilities into a single, fully converged Centre of Excellence.”

Launched in 2007, the popular mobile money service is currently being used by 40 million customers, operating in Kenya, Tanzania, Lesotho, Democratic Republic of Congo, Ghana, Mozambique and Egypt. m-Pesa was also launched outside Africa in Afghanistan. Currently, only 25% of m-Pesa customers have access to a smartphone, though this number is increasing by 10% each year. The more customers who are on a smartphone, the more complex and varied services which can be offered by Vodacom and Safaricom.

World Bank continues mission to make Africa more investable

The World Bank has selected Progressus to head-up the second phase of its ambitious African Regulatory Watch Initiative (RWI).

The African RWI is an interesting and unique project, aiming to tackle some of the more unique challenges faced across the African continent. Despite progress being made in the connectivity field, there are still some very difficult hurdles to overcome to close the digital divide on the continent, as well as place Africa on a level playing field with more developed regions.

The RWI will aim to tackle some of these challenges, such as licensing, spectrum allocation, taxation and tariffs, as well as appropriate regulatory oversight and accountability.

“This is an extremely exciting project,” said Olivier Jacquinot, who heads up RWI at Progressus. “RWI Phase 1 managed to identify some key regulatory levers that pushed forward the development of broadband in some countries. Phase two will deliver an even greater level of analysis – and help keep the African telecoms industry moving forward.”

Despite being managed by the World Bank, the financiers are staying pretty quiet regarding their own drivers and ambitions. That said, it might not be difficult to guess, these are moneymen after all and have some very obvious objectives.

One objective might simply be confidence. Bankers and venture capitalists are always looking for new investments, and the telecommunications industry is proving to be increasingly popular. An initiative which provides an improved and standardised regulatory environment across the continent might well be an important step to providing confidence to invest in the African telecoms and infrastructure industries.

Despite there being great potential for investors on the continent, Africa has several unique challenges. Accessibility, both financial and technological, is a significant one, though an incredibly fragmented and varied regulatory landscape across the continent is an issue.

At AfricaCom in November, MTN CEO Rob Schuter used the acronym CHASE to indicate the major challenges on the continent; Coverage, Handsets, Affordability, Service bundles and Education. Some of these challenges can be addressed through industry initiatives, such as the RWI, though others need much bigger thinking. Making the economics of network deployment or handset accessibility is a significant barrier.

On numerous occasions, more nefarious challenges such as government and regulatory corruption are raised as barriers also. Such rumours will always make investors nervous.

The first phase of the initiative was launched in 2017, and due to the success, the second phase will be launched imminently. 22 regulators have signed up so far, perhaps demonstrating how desperate some of these nations are for external investment; no-one likes being told how to govern or regulate their own sovereign nations after all.

In the second phase, Progressus will introduce the RWI Index. This ranking system will benchmark each of the nations involved in the RWI. The Index will be based on spectrum management, Universal Service Funds management and other Government support measures and regulatory governance.

Africa is a unique continent with some very unique challenges, and this initiative should provide a stable route forward. It isn’t the most revolutionary idea, but there is no need to reinvent the wheel sometimes.

Orange opens new Africa and Middle-East HQ in Casablanca

Orange has announced it has opened its new headquarters for the Africa and Middle-East region in Casablanca Finance City Tower in Morocco.

The Africa and Middle has been gradually offered more autonomy as a unit since 2015 and opening a headquarters on the continent is as much a symbolic gesture of this trend continuing. With 125 million customers across the region already, Orange is certainly making progress in an often challenging market.

“Orange is one of the rare international groups to have made the strategic choice, 20 years ago, to seek to develop in Africa and the Middle East,” said Group CEO Stephane Richard.

“We have always been convinced of the immense potential of this continent. In many ways, it can be seen as a model for digital transformation; mobile money is a great example of this.

“One of the key success factors behind new services is to develop them in Africa so that they are adapted to specific local requirements and so meet the needs of our customers. That is why we have decided to organise the management of our business in Africa and the Middle East from within the region directly from the African continent.”

While many telcos have desires to cash-in on the under-developed markets around the world, few have made as obvious a success of the ambition as Orange in Africa.

Looking at the most recent financial figures, revenues for the Africa and Middle-East business rose 7.6% for the third quarter of 2019, bringing in €1.447 billion. For the first nine months of 2019, revenues across the unit accounted for €4.185 billion. Orange now has 22.5 million 4G customers across the region, up 49% year-on-year, while a third of 44m Orange Money customers are active.

Looking forward, the prospects are looking very favourable for Orange. The team has launched 4G in 17 markets, while investing €1 billion in the networks across the year will certainly see some new developments. The team is also heavily targeting the agricultural industry with IOT services, hoping to increase revenues between 10-30% on average.

Looking at the Engage 2025 strategy, Africa and the Middle-East has been highlighted as the most significant growth engine for the business. This is potentially a very lucrative region for the telco which has laid the groundwork in recent years to realise its ambition of being the ‘reference digital operator’ in the region.

KaiOS shows why it is critical to Africa’s digital ambition

Working in tandem with Vodacom, KaiOS has brought another smart-feature phone to the market, this time in Tanzania for the remarkable price of $20.

With an install base of 80 million already, the alternative operating system is proving to be a very viable and attractive alternative for the development markets. The latest push forward is in Tanzania, with the $20 Smart Kitochi connected-feature phone, which has sold out already. Vodacom said 5,000 devices were sold in the first four days, while the team is waiting for another shipment to land next week.

The device is built on the MediaTek chipset and powered by the KaiOS operating system, enabling 3G and 4G connectivity, access to a new KaiOS app store and many slimmed-down features which we take as commonplace today.

The emergence of KaiOS, and the enthusiasm of the telcos to embrace a new dynamic, is helping the team tackle a major hurdle for shrinking the digital divide in Africa; affordability of internet connected devices.

When you consider the monthly take home salary of an individual in Africa could be as little as $100, the internet becomes an unachievable dream. Who can spare money to invest in a smartphone when you have to pay the rent and feed your family? This is where KaiOS fits into the equation; it has driven the creation of an ecosystem to manufacture feature phones with 3G and 4G connectivity features. It is a compromise. A no-frills device which allows some of the world’s poorest individuals to benefit from the digital economy.

What is worth noting is this is not a direct threat to the dominance of Android in the operating system segment. KaiOS should be seen as complementary to Google’s efforts.

Firstly, what is always worth bearing in mind is that Google is a KaiOS investor. It was one of the four companies which funnelled cash into the business to drive development in the early years.

Secondly, Google services will continue to run on KaiOS devices. The team has no intention to create alternative products in-house, such as mapping or messaging features. Although it is a different operating system, the more successful KaiOS is, the more exposure Google products get.

Finally, the monetization model at KaiOS is completely different to Android. Whereas the Google team drive revenues by placing products as default applications on Android devices, KaiOS generates cash through revenue sharing models and commission earned through in-app purchases.

Like Android, KaiOS is free of license fees for the telcos, an important aspect of the model. As soon as licensing fees are introduced, there is a risk of telcos charging more for the devices, which will lead to a smaller install base for KaiOS. Charging licensing fees would undermine the very concept of the business.

Google has once again invested very intelligently. To drive future revenues, Google needs to gain exposure to more individuals. Unfortunately, Android is a smartphone OS and not entirely applicable to the developing markets. It could be re-imagined, but then again it might be much more efficient to simply invest in a company which can specifically build an OS for smart feature phones. The slimmed down version of Android looks to be living on limited time and it would not be surprising to see the OS culled.

With more and more affordable devices flooding onto the market, more people are taking into the digital economy. If KaiOS continues to grow its user base, Google’s products such as Maps and YouTube, which are installed as default on the devices, are used by more people. By investing in KaiOS, Google has gained an extra 80 million customers, and these are still the early days.

KaiOS has already launched in several markets, though India is the most successful to date. In partnership with Reliance Jio, the Jio phone has proven to be very popular allowing KaiOS to surpass Apple iOS as the second most common OS in the market. There will be launches in the near future, but this all depends on the appetite of the telcos.

KaiOS highlighted during a press conference that it is the telcos who decide future launches, as they have the retail presence to push the smart-feature devices out to the market. Although handing over control to a third-party is not the most comfortable position to be in, there is drive from the telcos.

If the telcos are going to secure additional revenues, they will need more people to be connected. Device affordability is one of the biggest challenges to connect the unconnected, so expect to see some aggressive moves forward with new device launches. Vodacom is a very good partner for KaiOS, with the telco maintaining a presence in 32 African nations.

Connecting the unconnected is still a monumental challenge in African, though the creation and aggressive deployment of new ideas is generating momentum. Underpinning all of this success is the emergence of affordable, internet-connected devices, and an operating system which is perfectly designed for the unique connectivity landscape in Africa. KaiOS has a very bright future and the importance of this business should never be undervalued.

Pan-African initiatives are only way to solve its connectivity conundrum

Connecting the unconnected is an ongoing challenge for anyone in the African telecoms industry, but where do you find the $435 billion to plug the holes?

It might sound like an extraordinary number, but when you consider the size of Africa, 30,37 million km², and the population, 1,216 billion, it starts to look a bit more reasonable. This is a challenge which has been discussed extensively over the last few years, though a viable solution has not been tabled.

This is not to say there is no progress. This week, Liquid Telecom announced it had completed the construction of a new high-capacity fibre link running 2,600-kilometre (km) across the Democratic Republic of Congo (DRC), while Orange is about to begin work on an international backbone network in West Africa, connecting eight countries. These are promising steps forward, but the monumental scale of the challenge suggests such projects are little more than a drop in the ocean.

With such a significant mountain to climb, new ideas and new approaches need to be considered. Speaking at AfricaCom, Carole Wamuyu Wainaina of Africa50 has called for greater harmonisation between the 54 nations across the continent.

One of the challenges with developing a communications infrastructure to take Africa into the digital era is the moving parts. 54 sovereign states, most of which are not the wealthiest, are moving forward with independent connectivity plans. There is nothing wrong with this, but a common strategy would be significantly more efficient, both in terms of time and money.

This is not necessarily a new idea, Europe relies on the power of many after all, and there are initiatives in place in Africa. Wainaina pointed to some small-scale joint-initiatives to deploy electricity infrastructure as an example, but these are limited in their nature. For success to accelerated, a genuine pan-African approach should be considered. Pooling resources, talent and ideas could realise significant efficiencies.

The last few years have seen an attempt to create some cohesion between the nations, meetings between the ICT Ministers are not uncommon, but this seems to be all they are at the moment; meetings. At some point, the talking will have to stop, and action will have to be taken. Few government officials like to do anything new or innovative, though big challenges require big actions.

The creation of a pan-African deployment plan might be the only way to deploy connectivity infrastructure which spans the width and breadth of the continent, but rhetoric will have to turn into action sooner or later. Politicians like to talk, promise and posture, but that achieves nothing.

Spectrum shortage is killing African digital ambitions

Telcos complaining about government regulation and policies is not unique to the African continent, though they never seem to get along here.

Through the years there have always been complaints from the telcos at AfricaCom. Whether it is import tax making devices unaffordable or policies which don’t attract international investment, the bureaucrats constantly seem to be on the backfoot. This year’s event saw a global pain-point hit the keynote conference agenda; spectrum availability.

This is of course a gripe of almost every telco around the world; there isn’t enough spectrum available to deliver the digital economy which politicians have promised voters. However, when you breakdown the numbers, there are some valid concerns. Looking at the South African landscape demonstrates the point.

  Telco holding
Spectrum band Vodacom MTN Cell C Telkom Rain
900 MHz 22 MHz 22 MHz 22 MHz
1800 MHz 24 MHz 24 MHz 24 MHz 24 MHz 34 MHz
2100 MHz 30 MHz 30 MHz 30 MHz 30 MHz
2300 MHz 68 MHz
2600 MHz 15 MHz
3500 MHz 28 MHz 142 MHz
Total 76 MHz 76 MHz 76 MHz 150 MHz 191 MHz

Speaking during the keynote sessions, MTN CEO Rob Shuter highlighted the South African Government is demanding more from the telcos, without offering more of this valuable asset to deliver. The MTN business has been working with the same spectrum allocation for decades, a situation which cannot continue. More spectrum is needed.

This is one example, though the story is pretty consistent across the continent. The issue is apparent when you compare it to the UK.

  Telco holding
Spectrum band EE Vodafone Three O2
800 MHz 10 MHz 20 MHz 10 MHz 20 MHz
900 MHz 34.8 MHz 34.8 MHz
1500 MHz 20 MHz 20 MHz
1800 MHz 90 MHz 11.6 MHz 30 MHz 11.6 MHz
1900 MHz 10 MHz   5.4 MHz 5 MHz
2100 MHz 40 MHz 29.6 MHz 29.2 MHz 20 MHz
2300 MHz 40 MHz
2600 MHz 70 MHz 45 MHz 55 MHz
3500 MHz 40 MHz 50 MHz 60 MHz 40 MHz
3700 MHz 80 MHz
Total 260 MHz 211 MHz 289.6 MHz 171.4 MHz

Not only is there more spectrum available, it is broadly spread across a range of spectrum bands to address different usecases and challenges. Soon enough another spectrum auction will take place in the 700 MHz and 3600-3800 MHz spectrum bands.

This is of course a very simplistic way to look at the landscape. South Africa is a very unique country, and spectrum is allocated with conditions, such as minority ownership of the telco. There is an on-going conflict between the major telcos and the government regarding the obligations placed on spectrum allocation, but the end result is still the same; a scarcity of an incredibly valuable resource.

There is perhaps a glimmer of hope however. In recent weeks, the government published an ‘Information Memorandum’ outlining plans for additional spectrum to bolster 4G connectivity and pave way for 5G in the future, though attendees at AfricaCom are not exactly enthralled by the situation. For some, this is just more talk in place of action. Confidence in the governments ability to sort out this mess in a timely manner is not particularly high.

This sceptical view is perhaps supported by the 800 MHz spectrum band. Currently being used by broadcasters, there have been promises to clean the airwaves for use in the mobile world, though little of this promise has translated into assistance for the telcos. The frustration continues.

South Africa seems to have an ‘us versus them’ situation currently. Governments and telcos are rarely best of friends elsewhere, but there is a collaborative environment to ensure an effective connectivity landscape. The Shared Rural Network proposal in the UK is an excellent example of bringing together various different parties with compromises being made to achieve a common goal. This collaborative environment does not seem to exist in South Africa.

If South Africa, and African nations in general, are to compete with other regions in the digital economy, or drive digital inclusion across society, the spectrum conundrum needs to be addressed. But looking at the bigger picture, telcos and governments need to reduce the friction and create a more collaborative environment. These are not parties who are ever likely to be the best of friends, but they should at least be able to tolerate each other in the pursuit of a common objective.