(From the recent interview published in African Wireless Communications Yearbook, click here to view the full article)
How would you describe your fortunes in Africa over the past year?
Enkudo enables digital mobile consumers to access globally supplied digital content and services through alternative payment methods such as Direct Carrier Billing (DCB) and mobile wallets. With its young and growing population, Africa is one of our major target markets due to the relatively limited adoption of banking and credit services.
Throughout 2020, we were quite busy with multiple projects in the whole continent. We signed a contract with a major global mobile operator in Ghana, launched our platform with the second largest operator in Algeria, integrated with a leading Payment Services Provider in Nigeria, introduced a streaming video service in Tunisia and pursued qualified leads in various African countries. Overall, it was an effective year for us, and despite the challenges of the pandemic globally, we maintained a high pace of growth in Africa.
What was the biggest challenge?
The complexity of business processes and the changing regulatory environment was the biggest challenge for us. For example, due to a Nigerian regulation enforcement, we had to introduce another local partner in the value chain, which added to the integration and the operations costs of our business, and squeezed our margins.
Another challenge is the low predictability of payment timelines and financial risks due to exchange rate fluctuations, as a result of the political volatility in some African countries. With one of our accounts, we experienced significant financial loss due to the sharp increase in exchange rates while we were on hold for delayed payments.
Finding proficient local partners that we can work in alignment with, is still not an easy task in Africa. Most local companies in telecom space have limited experience in digital services domain. In our engagements, we spent significant time and effort for the training of our partners regarding the fast-growing digital services domain.
What opportunities did you see?
Despite all the challenges, the opportunities in Africa remain to be attractive for us. We are still covering a small portion of the region and we plan to replicate our existing business engagements, especially across the local properties of large mobile operator groups.
Our first-ever integration with a Payment Service Provider was realized in Nigeria. We are very excited about this project, as it opens a whole new channel for charging for digital content and services. Digital Services business has potential to grow not only through mobile operators, but also through Payment Service Providers (PSPs), Internet Service Providers (ISPs) and FTTx companies.
As Africa continues to develop in the coming years, the consumption of digital content and services will grow exponentially. By establishing widespread connections in Africa at this early stage, we aim to build a strong foothold that will enable the expansion of our Enkudo digital services business in this region.
What trends did you spot?
When digital content and services are concerned, we see that gaming remains as the strong category leader of the industry, which is followed by education and well-being. I believe that all these categories have been positively affected by the pandemic, as individuals changed their habits towards the consumption of personal entertainment, fitness applications and remote training services at the comfort of their homes. Overall, the pandemic accelerated the digital transformation both at the enterprise and individual levels.
This year we also observed that all mobile operators in Africa have put digital services business in their list of top priorities. Globally speaking, most of the telecom services providers got caught off guard in the last decade, when 4G deployments and smartphone created a fertile ground for Over-the-Top (OTT) service providers to flourish. This paradigm shift jeopardized even the core services of mobile operators, such as voice and messaging, for which significant decreases in revenues were observed. During that period, mobile operators considered OTTs as a threat. That is not the case anymore. We see that the telecom space is more welcoming to digital service providers now and they look for opportunities to leverage the strengths of a partnership with them. I believe we will see this trend getting stronger in the coming years.
What will be your next focus?
Our strategy for business growth in Africa has three main dimensions: broader coverage with new integrations to mobile operators, wider variety of content and services in our digital catalog and stronger content sales though performance marketing.
While we will continue adding new mobile operators from Africa to our customer base, to grow our pool of digital content and service providers we will utilize a digital marketplace solution that we started building in 2021. We are planning to launch Enkudo Digital Marketplace at the beginning of 2022 as a white-labelled solution, with a rich pool of content in various categories, such as games, streaming video, streaming music, mega promotions, well-being, edutainment, and others.
We believe that through this marketplace digital services will be rolled out to the end user a lot faster. The branding and look-and-feel of Enkudo Digital Marketplace are customizable based on the needs of the telecom operators. This solution will be powered by performance marketing tools that aim to maximize the Customer Lifetime Value (CLTV) for digital services business.
How do you see things going next year and beyond?
Digital services will dominate our daily routines in the coming years in all aspects of our daily lives. We expect quantum leap in the number and variety of services, with the support of new technologies in augment reality (AR), artificial intelligence (AI), cloud gaming and 5G networks. The concept of “digital consumer” will be the focus of almost every business, and service providers will compete in the digital space more aggressively than ever before. The developments around super-apps, meta-universes, crypto-currencies, and internet of things (IoT) will shape the market for many companies, and new services that were not even imagined before will soon become available.
Overall, we expect exponential growth in digital services market with more players jumping in this domain from media, sports, entertainment, healthcare, finance, and government sectors. Our goal is to benefit from this growth by leveraging our robust technology and flexible business operations.