Starfish Mobile, a wireless application service provider (WASP) which operates in 22 African territories, in partnership with 35 mobile operators, 5 corporate offices in Nigeria, Zimbabwe, South Africa, Ghana and Tanzania generates about 80% of their entire business revenue from SMS services.
This is despite the rise of mobile applications and mobile instant messaging services.
Wayne Nelson-Esch, Starfish Mobile CEO says Starfish Mobile, launched its first service in Congo DRC in 2003 with the then Celtel, which later became Zain and now Airtel.
“Our key objective and strategy was to be a dominant player on the African continent,” says Nelson-Esch.
“It was difficult in those days. We had to enter unfamiliar countries, setup the proper infrastructure and roll-out VAS services. We encountered a fair amount of challenges being the pioneers of some of the services in most of the African countries,” says Nelson-Esch
“Starfish Mobile launched the first VAS services in DRC and Tanzania. We almost pioneered the way for most VAS (value added services) providers currently operating in Africa,” says Nelson-Esch.
Nelson-Esch, says Starfish Mobile is avoiding the current trend of ‘dropping’ basic services like SMS in favour of the more ‘sophisticated’ mobile applications.
“The reality is most of the companies rolling out new services have never spent years across Africa to understand what actually works. There’s a market that is growing and will use mobile applications but a vast majority still rely on basic SMS service to download music, games and ring back tones (RBTs),” says Nelson-Esch.
“The most used form of mobile communication in Africa is still SMS. Africa is potentially the largest and the last massive growth market for telecoms.”
Nelson-Esch says Starfish Mobile experienced some challenges in Africa due to business inefficiencies. He believes some operators lack a full understanding of the entire VAS business model.
“In some cases, Starfish Mobile wrote the VAS business strategies for the various African operators. We created the legal frameworks around the contracts, for example in Uganda, we created the WASP code of conduct from an aggregators point of view,” says Nelson Esch.
“Since then, VAS has become more important,” admits Nelson-Esch.
Mobile Market in Africa
“Airtel is coming into Africa with their way of doing business and they deploy VAS based on their experiences in India, says Jonathan Hoehler, Starfish Mobile, Chief Technical Officer and Business Analyst.
“Airtel has deployed VAS, across its 16 territories in Africa by dropping prices and therefore dropping the margins. The company focuses a lot on RBTs, music and football, which remains the most followed mobile service in Africa,” says Hoehler.
“Voice revenue will always be the dominant generator for any mobile operator. As more handsets come into the market and cheaper broadband becomes more available, VAS including SMS to high 3G services will start to increase,” says Hoehler.
Growth of smartphones in Africa
“ARPUs (average revenue per user) in Africa are generally very low. One figure that was quoted was that Airtel Group in their 16 territories in Africa, ARPU is about $7.2 per month but for all services – voice, data etc. That’s extremely low,” says Hoehler.
“The cost of actual handsets becomes a barrier to entry. A majority of mobile phones users in Africa are prepaid, about 97% in some territories. The ability to get new smartphones is a lot more limiting across the continent,” says Hoehler.
“Cost is still a major barrier. Nokia still owns about 65% of the market share in Africa largely due to the quality of their devices and the excellent battery life.”
“The interesting aspect is the spread of the BlackBerry smartphone across the African continent. A lot of the middle income earners don’t have a laptop at home and rely on BIS(BlackBerry Internet Service) as it allows them to be connected to the mobile Internet. It is also becoming a status symbol,” says Hoehler.
Mobile Growth in Africa
Starfish Mobile believes 3 main mobile services will further drive the company’s growth in Africa – m-agriculture, m-health and m-education.
“Companies need to build simple low tech applications for Africa’s mobile market. Applications in this regard refers to SMS (Short Message Service), AVR (Advanced Voice Recognition) and USSD (Unstructured Supplementary Services Data),” says Nelson-Esch.
Why are RBTs so successful in Africa?
“RBTs are not dependent on any mobile handset or upmarket technology. All the technology resides with the mobile operators. If you look at all the mobile services that are successful in Africa, most are not handset dependent,” says Hoehler.
Bontle Moeng – ITNewsAfrica Online Editor