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- Africa's telco kings are evolving
Africa's telco kings are evolving
Can an old dog learn new tricks?
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The world's top companies are tech giants: Microsoft, Apple, and NVIDIA.
Microsoft makes software like Windows and Office.
Apple creates iPhones, Macs, and other cool gadgets.
While NVIDIA builds chips used by over 90% of AI companies - it’s the AI engine of the world.
Together, these three companies are bigger than China’s stock market.
But what about the biggest companies in Africa?
Well, they are tech giants too.
But they don’t make software, iPhones, or chips.
Instead, they help people make calls, connect to the internet, and even move money.
Companies like Safaricom, MTN Econet and Vodacom.
They are …
Africa’s connectivity kings
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Africa skipped landlines for mobile phones.
Telcos, or ‘Africa’s connectivity kings’, were right in the middle of this change.
When mobile phones reached Africa in the late 90s, these companies started setting up cell towers.
They covered towns, cities, and even remote areas that didn't have cable phone lines.
With connections available everywhere, you can now make calls from almost anywhere.
And having a phone suddenly made sense.
This ramped up mobile connections, and Africa hit 500m in just 10 years.
Telcos cashed in, selling airtime and feature phones so people could connect around the world.
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Then in the mid- to late 2000s, things flipped again in Africa: smartphones started popping up.
The next level: Africa got connected
In 2001, African telcos and their partners laid down an undersea fibre optic cable system.
Today, these cables connect Africa.
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They carry massive amounts of data between countries and continents.
The next phase of telcos: The Internet
Telcos package the internet into data plans for users to buy from their phones and surf the web.
Africa leads global mobile internet traffic, with Nigeria surpassing even India in usage.
Telcos are selling less airtime and more data. So they’re moving online to see how they can capture more value.
Enter: The telco Super app
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In 2007, Safaricom, East Africa’s largest telco, launched M-Pesa.
Initially, the idea was to create a personal loan service using a phone, a SIM card and text.
But Safaricom noticed that the bulk of the loans were being sent to other people through the app.
So they turned M-Pesa into a money transfer platform.
Now, it serves over 51 million customers across seven African countries with money transfers, loans, savings, and more.
And Africa has become the world’s biggest mobile money market.
For years, telcos made big bucks connecting Africa through calls, texts, internet, and mobile money.
But telco revenue mix is changing as people switch from airtime calls to texting and calling on apps like WhatsApp.
Telcos are now making more money from selling mobile data than airtime.
So to replace shrinking voice revenues, these companies are exploring new ways to make money.
But can an old dog learn new tricks?
Telcos are re-inventing themselves
And they’re doing it with super apps.
A super app bundles different everyday services, into a single app.
The app lets users order takeout and groceries, book flights, and pay bills.
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And super apps make sense for African users
Because, as more Africans get smartphones and go online, how they use their phones is changing.
On average, we spend about a third of our day online — scrolling social media, playing games, transferring money, or shopping.
But most Africans don't have fancy phones with lots of storage.
Most smartphones shipped to Africa are low-end models.
These phones have limited storage, so users have to delete apps, files, or photos to make room for new ones.
But with super apps, most phones can handle banking, catch a ride, and shop all in one place.
Telcos are after the next big thing
Ryan Anderson is the founder of Novacom Africa, a company that connects telco operators with tech vendors.
He says that telcos can create an ecosystem for developers to build the best super apps on top of their network.
In South Africa, Vodacom is the biggest mobile network.
They boast a 40% market share and 45 million+ users.
But in 2020, they launched VodaPay, a ‘super app’ in South Africa.
It got 1.4 million registered users in its first three months.
And now, that number has ballooned to over 4 million registered users.
For businesses, VodaPay makes digital payments easier and cheaper too.
And they’re not the only telcos with super apps:
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Since launching in 2019, Ayoba, available on MTN’s network, saw its monthly active users jump to 35 million in 2023. Users can chat, call, read news, play games, and listen to music.
The M-Pesa super app passed 3 million users last year. It hosts 60 mini-apps for e-commerce, insurance payments, and flight bookings.
While Orange has racked up over 8 million users for its "Max it" super app. It blends mobile money with an e-commerce platform for digital content and ticketing services.
But why does this super app bug even matter?
Ryan tells us that Telcos are looking at other ways to build online - like APIs.
‘Networks APIs are being touted as a saviour for telcos globally. Telco operators can play a valuable role and find ways of monetising their data differently.’
Telcos have been kings of connectivity.
But they’re learning new tricks like creating digital marketplaces and making life easier for millions of African users.
Do you think the super app bet is the right one? How are you seeing telcos innovate?
Hit reply and let us know.
And that's a wrap!
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