Streaming venture leads Disney to 29% revenue surge

The Walt Disney company has reported a 29% increase for year-on-year revenues thanks to its streaming bet, but COVID-19 has forced the team to withhold dividend payments.

The impact of the coronavirus pandemic is clear over the last three months, as Disney has been forced to close all theme parks and the majority of retail stores, while there have also been supply chain disruptions. The launch of Disney+ has offset much of the negative, while the suspension of dividend payments should save the company somewhere in the region of $1.6 billion in cash. This saving will become very useful as the team continues international launches for the streaming venture.

“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said CEO Bob Chapek.

“Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

Walt Disney revenues for Q2 2020 and H1 2020 (USD ($), millions)
Three months to March 28 Year-on-year Six months to March 28 Year-on-year
Revenues 18,009 21% 38,867 29%
Net income 475 (91%) 2,608 (68%)
Free cash 1,910 (30%) 2,202 (39%)

Source: Walt Disney Company Investor Relations

Looking across the business, Disney has been impacted quite severely by the coronavirus outbreak:

  • Cinemas are closed impacting theatrical release and delay to home entertainment revenue
  • Production for new content has been halted
  • Advertising for broadcast TV has been dampened, impacting ESPN and Hulu
  • Parks, hotels, experiences and retail footprint are closed
  • Construction and maintenance is on-hold
  • Benefits and synergies of $71 billion Twenty-First Century Fox acquisition delayed

There does seem to be light at the end of the tunnel for the parks and retail business unit with business returning to normal in China. The Disneytown shopping and entertainment complex has been reopened, while Shanghai Disneyland is scheduled to reopen next week. The team will hope these timelines are replicated around the rest of the world.

There will of course be negative consequences for every business during this unique period, however, Disney does of course have positives to point to. Most notably, the launch and expansion of its streaming platform, Disney+, and new content which has been released on other content platforms.

ESPN has seen viewing figures increase by 11% year-on-year, thanks to the release of Michael Jordan and the Chicago Bulls docuseries, The Last Dance, and the NFL draft, which took place virtually. But it is Disney+ which steals the headlines here.

Over the first five months, Disney+ has bagged 54.5 million subscriptions, vastly exceeding expectations, while there are still lucrative launches in Japan, the Nordics and Benelux over the next few months. The team is not providing much insight on when it plans to break into profitability, but adoption trends around the world are very encouraging to date.

Performance of Walt Disney media assets to March 28
Subscribers (million) Year-on-year Monthly ARPU ($) Year-on-year
Disney+ 33.5* 5.63
ESPN+ 7.9 359% 4.24 (17%)
Hulu (SVOD) 28.8 24% 12.06 (5%)
Hulu (Live and SVOD) 3.3 65% 67.75 29%

*Does not include April subscriber acquisition

This is a major growth asset for the business, especially under the current circumstances. Interestingly enough, there might be an opportunity to offset losses, by releasing certain titles directly on the streaming platform, cutting out theatrical release.

“As you know, we had seven $1 billion films in calendar year ’19,” said CEO Chapek. “But we also realize that either because of changing and evolving consumer dynamics or because of certain situations like COVID, we may have to make some changes to that overall strategy just because theatres aren’t open or aren’t open to the extent that anybody needs to be financially viable.

“So we’re going to evaluate each one of our movies on a case-by-case situation as we are doing right now during this coronavirus situation.”

Releasing in theatres is a big financial draw for Disney, but it also comes with a significant financial outlay. Marketing dollars will still have to be attributed to launches on the streaming platforms, but with content consumption trends shifting more to on-demand, in the living room and the real world, it might make more sense to skip the cinema for some titles.

NBCUniversal has already started releasing some titles on streaming platforms for an additional premium. It has been stated this is due to COVID-19, but it might not be a temporary trend for all titles. Not only is it likely to be cheaper, it satisfies consumer demand and makes the streaming platforms more attractive to subscribe to.

The content business unit is holding the Disney empire up as all the other pillars crumble in the background. Disney is not a company which will ditch its physical business, but success attracts dollars. Chapek has said he remains ‘bullish’ on international expansion of Hulu, while Disney+ is looking like a rip-roaring success. The Walt Disney Company could look like a very different organisation in a few years.

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

Telcos have a huge role to play in navigating the COVID-19 pandemic

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Josh Gosliner, Global Head of Market Strategy at Juvo, stresses that the telecoms industry is more important than ever in these trying times.

As the world is overwhelmed by the COVID-19 pandemic, many industries are trying to understand how they will navigate the crisis. For Mobile Network Operators, it’s an opportunity to serve their communities and simultaneously build NPS, trust and general goodwill.

While the term “social distancing” has, unfortunately, become the phrase of 2020, we need to remember that the important aspect is distancing ourselves physically from others. Remaining socially connected through virtual means is critical for our safety, sanity and our best attempts to keep the global economy moving. MNOs provide the critical infrastructure that enables social connectivity in a physical distancing world.

There are three key ways in which MNOs will help all the world navigate this crisis:

Keeping People Connected

MNOs will have no problem doing the obvious here, keeping the networks up and running (that’s table stakes of course). Ensuring that consumers are able to keep their accounts active and service online is a bigger challenge. This is especially the case in developing markets, where the vast majority of consumers are on prepaid plans and top-ups mostly occur through in-person, cash transactions.

We’ve already seen a host of telcos step-up to ensure that people can maintain balance in their accounts and active on their plans. Increased data limits and similar measures are important, but in some cases won’t address the core problem: how does one buy service without having to do so in person, with cash?

Digital transformation projects over the years have made it easier for people to top-up online, through applications and/or web portals. For those with bank accounts and/or credit/debit cards, this is easy and efficient. For many people in developing markets, this may not be an option. This is where airtime lending can play a significant role.

Most telcos see airtime lending as a way to earn VAS revenues from those in a pinch. But when virtually everyone is in a pinch, this channel can be used at scale to keep people connected and prepaid revenues flowing. Many operators are discussing how they can lower fees and increase loan amounts, so consumers can stay connected longer, and more affordably.

Keeping Money Moving

Just as digital payment channels enable people to top-up their accounts, mobile money has the ability to play a huge role in the crisis. When money can pass through digital means it can keep people at home, or at least at a safe 2m (6ft) distance, to complete transactions. Telcos across Africa are slashing mobile money transaction fees to move people away from cash during the crisis.

In order to help citizens get through the crisis as well as stimulate economies, many countries are starting to disburse money directly to people. In the developed world, this can be done easily with cheques, direct bank deposits, etc. For developing markets, this can prove to be more of a challenge, and in some instances result in people lining up to get their money. Obviously this is problematic when trying to maintain physical distancing. Mobile money can play a significant role as a channel for digital disbursement of money, keeping people at home while ensuring they have the money they need to get by.

In many markets, telcos have been frustrated by a lack of traction with mobile money. This crisis has the potential to alter consumer behavior that lasts into the long term. Making mobile money useful and affordable to consumers today will help them get through the crisis, but it may also make the whole ecosystem much stickier for both consumers and merchants going forward.

Maintaining Public Health

The most important thing we can do is to keep people from getting sick in the first place, and telcos have the ability to help us maintain our ‘normal’ lives while doing so through safer digital channels. Whether it’s messaging with friends, video calling your grandmother, or being able to get money from your government, mobile phones can help keep us healthy and sane.

Lastly, telcos can be the platform for messaging to masses of people with public health updates, from local or national governments that ensure people are following public safety guidelines. The ability to reach people on a wide and individual basis is critical to ensure accurate information reaches the public.

Nobody knows when exactly this crisis will end; when we can resume (somewhat) normal lives, and when we can definitely say that we have beaten COVID-19. Until we begin to stem the tide, MNOs are and will continue to deliver essential services to consumers. In addition to all the people that are doing amazing things to fight this pandemic, I hope we’ll all look back at the work that MNOs have done to help us emerge on the other side.

 

Josh oversees Juvo’s go-to-market strategy and is a specialist in consumer-facing and B2B mobile technology. Josh has led the development of Juvo’s Financial Identity as a Service (FiDaaS) platform, adding to a track record for delivering strategic, customer-centric technology to the market. Josh has a wealth of experience in product strategy development and marketing. Prior to his work at Juvo, Josh has worked within the technology sector with companies including Accenture, Glidr and Wandera.

Visa drops $5.3 billion on Plaid in bid to future proof itself

Financial services giant Visa is acquiring fintech app enabler Plaid in an apparent bid to ensure it doesn’t get left behind in the app economy.

Despite the $5.3 billion price tag, few people will have heard of Plaid. That’s because its sole function is to act as the plumbing in linking together apps with bank accounts, mainly in the US. It’s easy to assume that Visa and Mastercard already controlled nearly all of this but it seems not, with a quarter of Americans using Plaid to link their bank accounts with apps such as Venmo.

“We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business,” said Al Kelly, CEO of Visa. “Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.

“This acquisition is the natural evolution of Visa’s 60-year journey from safely and securely connecting buyers and sellers to connecting consumers with digital financial services. The combination of Visa and Plaid will put us at the epicenter of the fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory.”

“Plaid’s mission is to make money easier for everyone, and we are excited for this opportunity to continue delivering on that promise at a global scale,” said Zach Perret, CEO and co-founder of Plaid. “Visa is trusted by billions of consumers, businesses and financial institutions as a key part of the financial ecosystem, and together Visa and Plaid can support the rapid growth of digital financial services.”

Visa and a bunch of its competitors were early investors in Plaid, so it seems to have the blessing of the financial services establishment. It looks like the price paid was around double the valuation implied by Plaid’s last round of funding, so Visa had to compensate its peers generously to have it all to itself. Investors didn’t seem that bothered either way, however, with Visa’s share price barely acknowledging the news. Here’s a slide from Visa’s presentation summarising the thinking behind the move.

Study claims Financial Identity as a Service could add $250 billion to global GDP

A report published by Oxford Economics has looked into the implications of bringing into the financial system the millions of people currently excluded from it.

One of the key ways of achieving this is to provide these people with some kind of financial identity, something that is currently denied them by their inability to qualify for a bank account. It just so happens that the sponsor of this report is Juvo, which specialises in just that. Read into that what you will, but if the methodology is rigorous and transparent then the vested interest of the sponsor needn’t be an issue.

The kind of Financial Identity as a Service (FiDaaS) Juvo offers only really applies to developing economies as that’s where pretty much the financial exclusion takes place. Among individual countries Oxford Economics identified India ($7bn GDP uplift), Indonesia ($15bn), the Philippines ($15bn), Pakistan ($9bn) and Mexico ($31bn) as the individual markets most likely to benefit from this sort of thing. A lot of the rest presumably came from Africa.

The single most important thing unbanked people lack is any kind of credit score, so it’s very difficult for potential providers of credit to make a risk assessment, which means they usually won’t bother. The direct interest to the mobile industry comes from the ability to offer more punters postpaid contracts, or even micro loans for prepaid airtime.

“These numbers only capture a conservative estimate of this market’s true potential, since many more people are underbanked,” said Anubhav Mohanty, Lead Econometrician at Oxford Economics. “The sheer scale, depth and value of this opportunity is far greater than we’ve been able to quantify here.”

“For financial institutions and the mobile telecom operators they partner with, [establishing financial identities] represents a multi-billion-dollar revenue opportunity,” said Steve Polsky, CEO of Juvo. “And for the unbanked, it opens up fair and equal access to useful financial services that wouldn’t otherwise be available to them.”

While we think it’s unlikely that Oxford Economics was going to conclude that FiDaaS is a complete waste of time (or if it had, that the report would have been published), there’s little reason to doubt the desirability of bringing more people into the global economy. The mobile sector has been looking at ways of compensating for the failings of the banking system in developing economies for years and this sort of thing looks like it could help.

It’s now or never for telcos to unlock financial services

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Steve Polsky, Founder and CEO of Juvo, argue that the telecoms industry is running out of time to claim a major stake in mobile financial services.

I’ve been in telecoms long enough to remember the early warnings that OTTs were going to eat the operators’ lunch. It became the pervading narrative 15 years ago. 10 years ago it started to happen. And it’s five years since the industry accepted the disintermediation of telcos as a reality.

Today we find ourselves on the edge of another industry-defining moment: will operators use their position to unlock access to financial services for the underbanked? OK, I’m slightly exaggerating. It’s not a truly existential issue. But, if operators get it wrong, then it can join ‘messaging’, ‘content’ and ‘the customer relationship’ as opportunities the mobile industry held in its hands allowed to slip away as a result of inaction. Operators must anticipate, or at least adapt to this wave while they still can. Resistance, as they say, is futile

Opening access to financial services is a big opportunity. It is worth hundreds of billions of dollars. It will change the lives of billions of people around the world. To date, I’ve been optimistic, hopeful and enthusiastic about the operator’s role. But over the last six months, I’ve started to become a little more pessimistic, doubtful and frustrated. I’m concerned that most operators are going to miss this boat.

What’s the opportunity?

Thanks to the World Bank, most of us understand that 1.7 billion adults are unbanked – literally frozen out of the formal economy. What’s less well-known is that at least 68% of adults (nearly 4 billion) around the world are underbanked. That means they have access to financial services in theory, but are excluded in practice. Think about that productive potential for one minute. It’s worth hundreds of billions of dollars in global GDP.

One of the main reasons these people are excluded from the formal economy is a ‘data’ problem. Put simply, they have no credit history. And as far as the financial services community is concerned, these people – all 3.9 billion of them – may as well not exist. There is such a paucity of data around these individuals that financial services companies cannot reasonably make even the most basic of decisions around allowing access to savings accounts, insurance or credit.

This data problem creates a gap in trust. Western society relies on data for creating and maintaining trust between enterprises (in this case, banks, insurance companies etc) and their customers. In developing economies there is no data, so there is no trust. The opportunity for operators is simple:

83% of adults around the world have mobile phones (Gallup Advanced Analytics). 71% of global mobile connections are on prepaid (Strategy Analytics, 2019). Operators can use the data from prepaid systems, apply machine learning and build financial profiles for the underbanked. They can offer low risk airtime loans to those that qualify to help customers to build a data-based credit history. They can then use that credit history as a basis for offering access to financial services both directly and indirectly (through financial services partnerships).

Who’s the competition?

Put simply, any alternative credit data provider is a competitor to telcos. But, in reality, no other entity can hold a candle to operators today. No one has access to financial and behavioural data like the telcos. Today, mobile operators are in the driver’s seat.  However, this is starting to change. Earlier this year Facebook announced the launch of Libra, an initiative designed to drive financial inclusion through the use of alternative data and crypto currencies in emerging markets. Libra is a direct threat to those few dozen operators that got mobile money right. But it’s also an indirect threat to every operator looking at the broader financial services opportunity – hundreds more.

Libra is important because it demonstrates that many companies – at launch Libra had more than 20 supporters from across the financial services value chain – are looking at driving profit from financial inclusion. 15 years ago, what we now call OTTs or ‘FAANGs’ were looking at mobile with the same commercial lust. And we know how that story ended.

While Libra has its own significant and high-profile challenges, its interest is real, its intentions are clear and its competitive threat is obvious. To my mind, the very existence of Libra should be enough to convince operators that now is the time to act. That now is the time to use the data and infrastructure they own to build the financial identities that the majority of adults in the world lack. That now is the time to partner with financial institutions to open up valuable, profitable financial services to a huge group of new customers around the world.

Who will win? And when?

While it’s hard to say who will win, it’s easy to see who starts off in the best position. While the FAANGs have strong and plentiful behavioural data, they don’t have financial data. That’s the ‘ace’ card here and that’s what operators are brandishing today – whether they know it or not.

Of course, the big tech firms are not going to sit still. While Libra looks set to spend a year or so wrangling with regulators before getting off the ground, you can bet that other big tech companies are looking at workarounds, for ways to access financial data. That’s why I see this as a race. That’s why I see this as something that is urgent. That’s why the decisions telcos make over the next 12 months will be critical to the value they accrue in the next 12 years.

It’s now or never

I don’t believe that mobile operators lack vision. I don’t believe that mobile operators lack ambition. I don’t believe that mobile operators lack capability. However, operators do lack time, focus and a willingness to partner with other industries. And that’s the killer in these situations. And so, it becomes a decision – and one that’s going to have to be made in the next year.

If operators want to play the pivotal role in helping to financially include more than half the adults on our planet, and to share in the positive social and economic benefits of this role, they have to make their move in the next 12 months. Many have. Many will. But many more won’t – and their businesses, and their stock price, will be judged on that basis. To my mind, the mobile industry will play a starring role in financial inclusion, and it will be incredibly well remunerated for it. But too many will miss out. And that’s a crying shame. It really is now or never.

 

Steve Polsky is the CEO and Founder of Juvo. Steve founded Juvo with an overarching mission: to establish financial identities for the billions of people worldwide who are creditworthy, yet financially excluded. With over 20 years’ experience, Steve’s career has centred on founding, launching and managing early stage technology ventures across the mobile and consumer internet sectors where, prior to Juvo, he was most recently President and COO at Flixster/Rotten Tomatoes.

Bringing Internet to the Other Half of the World

According to data published by the International Telecoms Union (ITU), the United Nations agency overseeing the telecoms industry, 3.9 billion people, or 51.2% of the world’s total population, were already connected to the internet by the end of 2018. While the 50% mark was hit half a year earlier than the agency’s previous estimate, it nevertheless means that half of the world’s population remains unconnected.

Here we are sharing the opening section of this Telecoms.com Intelligence special briefing to look at the status of the unconnected and under-connected parts of the world and explores how the industry as well as the public sector can overcome the challenges to bring internet to the half of the world yet to be connected.

The full version of the report is available for free to download here.

Introduction: why half of the world is still unconnected

The low internet penetration is particularly acute in the developing countries. While 81% of the population in the developed world are already using the internet, only 45% in the developing countries can do so. Among them, less than 20% of the population in the 47 least developed countries, defined as “low-income countries that are suffering from long-term impediments to growth”, enjoy this luxury.

Source: ITU

There are three leading factors at play to leave a large part of the world off the grid. The first two are interlinked one way or another, the third is out of the telecoms industry’s remit. The most obvious one is pure economics. Diminishing marginal return or increasing marginal cost, often both at the same time, means operators will be less and less motivated to connect the next subscriber than the last. This could be down to the distribution of population. The more sparsely populated the location is, the less rewarding for the operators to reach them it becomes, because, even if the returns are assumed to be equal, the cost will be higher. This could also be related to the socio-economic status of the people. The less well-off the population is, the less attractive it becomes for operators to make the effort, because, even if the cost could be assumed equal, the return would be lower.

There are also technology barriers. Unfriendly terrains, for example mountainous areas, prove extremely challenging for operators to overcome. Related to the economic factors, these areas are also typically not the most densely populated. Satellite communication could be used as an emergency solution but would be too costly to use as regular internet access mode, or for operators to provide it if there is not a sizeable user base especially business users.

In some cases, the hurdle is simply too high for telecoms alone to clear. High internet penetration in North Korea is highly unlikely to happen in the near future without a fundamental change to the country itself, for example.

With these considerations in mind, this report will address the first two factors affecting internet penetration: economic and technology. Specifically, it will attempt to provide answers to these questions:

  • On the supply side, what technology solutions have been made available to drive down the cost level, therefore to make connecting the unconnected more appealing to telecom operators? What are still debatable or being desired? What business case do they present to operators?
  • On the demand side, what factors need to be in place for the unconnected population to be able to afford the connection, and to be willing to embrace it? And what are the factors beyond cost that may also drive the demand?

——————————-

The rest of this briefing includes sections on:

  • Supply side solutions: OpenRAN, TIP, and all that
  • The drivers for demand: affordability and more
  • What else should be in place?
  • An interview with Thecla Mbongue, Senior Analyst, Ovum

To access the full briefing please click here

Facebook can’t stop dabbling in financial services

Not content with trying to create a new global currency, Facebook now lets you pay for stuff through all its apps.

The new financial service is simply called Facebook Pay and it lets you use Facebook, Messenger, Instagram and WhatsApp to pay for stuff. This isn’t an extension of Libra, it should be stressed, and is more of a competitor to the payment platforms provided by Google and Apple on smartphones. Indeed Facebook’s biggest challenge is to explain to its users why they need yet another mobile payment platform when there are already so many to choose from.

This bit of the announcement tells us where Facebook thinks USPs can be found: “Facebook Pay will begin rolling out on Facebook and Messenger this week in the US for fundraisers, in-game purchases, event tickets, person-to-person payments on Messenger and purchases from select Pages and businesses on Facebook Marketplace. And over time, we plan to bring Facebook Pay to more people and places, including for use across Instagram and WhatsApp.”

In common with the Google and Apple equivalents, Facebook pay merely acts as a conduit for actual financial service providers like credit cards. The company seems to have identified latent demand for a more seamless payments experience when using its apps. Alternatively it could have taken a look at how huge WeChat is in China and decided it wants some of that action.

Facebook tends to copy rather than innovate and, when it comes to minor features, this approach seems to have served it well. Trying to recreate WeChat in the US, however, is a much larger undertaking and will require some degree of market education, which won’t be easy. Having said that the CCMI people seem to have similar ideas, so US consumers look set for a bit of a mobile revolution in the coming months.

Libra attempts to placate everyone else

Facebook’s Libra cryptocurrency has received almost universal push-back since its announcement, so now it’s looking for ways to placate its critics.

To say Libra has had a difficult start would be an understatement. Financial regulators in the US and Europe almost immediately sounded the alarm about the prospect of a new cryptocurrency controlled by one of the world’s dominant digital platforms. They were joined by many other concerned voices in both the public and private sectors and by last week it had lost its biggest allies in the electronic payments world.

This was far from an ideal background to the first formal meeting of the Libra Association, which gathered in Geneva last week, but on the plus side at least it sorted the wheat from the chaff among its initial backers. In the event 21 founding members decided to stick around and sign the Libra Association charter, which is definitely better than nothing.

In a subsequent banking seminar Libra project lead David Marcus told the assembled bankers that Libra was open to looking at a bunch of different options for what form it would take, suggesting they might make it a stablecoin pegged to a bunch of existing fiat currencies, rather than a true cryptocurrency like Bitcoin, that would be subject to similar volatility in value.

That’s being positioned as some kind of major concession to meet regulators half way, but from day one Libra was positioned as a stablecoin, so it’s not obvious how much has changed. The transnational Financial Action Task Force recently has a meeting about stablecoin an seems to be pretty nervous about even that, so it looks like Libra has a lot of obstacles to overcome before it can expect to start winning round its many critics.

Libra partners stampede for the exit

Visa and Mastercard are among a group of partners in Facebook’s Libra cryptocurrency venture to decide the whole thing is too risky.

It has been widely reported that internet payment platform Stripe and consumer trading site eBay have also bailed on the project, following PayPal’s decision to step away last week. The general theme of the reasons they give for pulling out is that they still like the concept, but the regulatory heat they’ve all been getting the project was unveiled is just too rich for their blood.

A couple of other factors, on top of the precedent set by PayPal, seem to have influenced the timing of the decision. The Verge reports that Visa, Mastercard and Stripe all got letters from a couple of US Senators last week, warning them of severe regulatory con sequences if they continue with Libra. In addition there’s a Libra meeting today, in which partners are supposed to formalise their commitment to the project, they were compelled to make a choice one way or the other in advance of it.

“Facebook appears to want the benefits of engaging in financial activities without the responsibility of being regulated as a financial services company,” said the most ominous part of the letters. “If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities.”

Having the two dominant global financial services providers pull out is obviously pretty bad news for Libra. It now faces the task of convincing them the threatened regulatory Armageddon won’t come to pass, which won’t be easy. David Marcus, one of the founders of the project, attempted damage limitation on Twitter, but all eyes will be on the outcome of today’s meeting.