London — Vodafone's contested acquisition of Kabel Deutschland was highly publicized and is but one high-profile move by one of the former "masters of the universe" to address the all-data future.
Two similar things have happened in Africa that are closer to home. Firstly, Millicom invested in Rocket Internet's African companies and MTN pledged a wodge of cash for Amadeus Ventures' for investment in online and mobile applications and services.
When it comes to content and services, Africa's mobile users have by and large not voted for content and services that are offered and run by mobile operators. As ever mPesa remains the exception that proves the rule.
If mobile's not just for voice, then it is a rather unusual combination of transaction channel and media device. So what do you do to get into both of those spaces? The last five years show that mobile operators are not content or transaction services guys. Nearly all mobile VAS departments have not really covered themselves in glory in terms of driving use and revenues.
The strategic problem is a bigger one. Despite the shift to data, the centre of gravity of a vertically integrated mobile operator remains voice revenues and looking after the network. Companies like Vodacom and MTN have set up corporate ISP operations but they struggle for focus within the pull of the bigger company's centre of gravity.
The reason niche, independent corporate ISPs continue to exist is that they are able to offer focused customer attention. It's not the call centre operator telling you he or she will just have to talk to another department and come back to you.
Now if it's hard to get focus on something with revenues like corporate data business, imagine how much more difficult it is to do it with content and transaction services where the potential is today and the revenues are almost certainly tomorrow. It seems that both Millicom and MTN have sought to solve this problem by becoming investors in these kinds of companies. If they are a great success, they can buy them up and if they're not they can sell them off to another investor.
Millicom International Cellular made the first move in May this year by putting an additional US$45 million into Rocket Internet's online investments in Africa (which also got money from Summit Partners): Jumia, Hellofood, Kaymu and Vamido. The additional money is being used to expand into new markets including Nigeria, Egypt, Morocco, and Kenya
Millicom's President and CEO, Hans-Holger Albrecht said at the time: "The opportunities look even greater than when we first decided to invest in them. In Africa, e-commerce could hasten the evolution of the established retail sector as consumers increasingly adopt the digital lifestyle. That is why such timely investment is of essence."
In investment terms, the play is surely very similar to what Tiger Capital is doing with iROKO. None of the global online companies like Amazon or iTunes has much of a customer presence in Africa.
So with sites like Jumia you can build the regional equivalent of Amazon and provided you have access to capital, there will come a point where increased broadband access, changing buying habits and a rising middle class will get you close to success. At which point, the mobile investor can buy or it can sell on and make a reasonable return. The investors and the mobile company investor spread the risk.
MTN's move in July 2013 was to put a slightly larger sum (US$75 million) into Amadeus Capital Partners' IV Digital Prosperity Fund. It will invest in late stage venture and growth companies, predominantly in mature markets, developing online and mobile applications and services targeted at the rapidly expanding middle classes in Africa, the Middle East, Asia and Latin America.
In its official announcement Amadeus said that the investment was "focused on technologies that leap-frog desktop applications and services to those designed specifically for 'mobile first' and the technologies and platforms that underpin such services."
Now all the mobile incumbents have to do is to start making their own distribution channels and product and services marketing capabilities fit with this different future... but that's a story for another day.