FOCUS-Music streamers turn to telecom operators to charge Africa

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By Nqobile Dludla and Supantha Mukherjee

JOHANNESBURG / STOCKHOLM, October 15 (Reuters)Africa, with its internationally recognized musical talents – and the growing use of the mobile phone – is at the heart of Swedish music streamer Spotify POINT.N plans to expand its reach to one billion customers.

While African artists such as Burna Boy from Nigeria and Black Coffee from South Africa are shown around the world, the continent was seen as an obvious choice and is home to more than a third of the company’s 85 new markets.

The problem is paying on a continent where a lot of people are more likely to have a cell phone than a bank account.

This means that Spotify’s first task as it implements a plan announced in February to almost double its footprint is to win over telecom companies which are often equated with banks.

Phiona Okumu, Spotify’s music manager for Sub-Saharan Africa, told Reuters the company secured “alternative payment methods”, namely M-Pesa, when it moved to Kenya in February.

Owned by Kenya’s largest telecommunications operator, Safaricom SCOM.NR, M-Pesa is used to send money, save, borrow, and make payments for goods and services.

“A lot of African countries are unbanked which means they don’t use credit cards and this is very true for a lot of (countries) in East Africa and Kenya you use M- Pesa for the most part, ”Okumu said.

Elsewhere in Africa, Spotify is looking for other collaborators.

“We are having conversations with the right partners to make sure we are providing solutions to the payment issues facing several African consumers in different parts of the continent,” Okumu said.

HUNTING FOR MOBILE MONEY

Kenya-based Spotify premium user Irene Kophen said she prefers M-Pesa over bank cards because she believes mobile money has made music more accessible.

“Most of us have access to our phones, but few of us have cards or bank accounts,” the 31-year-old told Reuters.

Costs associated with opening bank accounts, distance from financial institutions, and difficulty meeting “Know Your Customers” requirements due to insufficient proof of address added to the appeal of using the phone to pay.

“In recent years, the focus has been on expanding innovative banking services through mobile technology to capture low-income segments and the unbanked,” a spokesperson for South Bank said. -African Absa. ABGJ.J said in an emailed statement.

In 2020, sub-Saharan Africa had 548 million mobile money accounts, up 12% from 2019 – more than any other region in the world, said mobile industry body GSMA.

This provided banking access in a continent where about 43% of sub-Saharan Africans over the age of 15 had a bank account in 2017, according to the World Bank, which did not provide more recent data.

WIN, WIN

Spotify’s local rivals, such as Mdundo, based in Kenya and listed in Denmark MDUNDO.CO and Boomplay, headquartered in Nigeria, have also started forging links with mobile operators.

Such partnerships rely on telecommunications providers selling music packages that give customers access to a streaming company’s premium service and exclusively selected music mixes.

Collaboration can benefit both parties by increasing revenue and helping to grow subscribers, but for streaming companies it’s anything but essential.

“It is essential that streaming companies get it right, otherwise they will lose the revenues of consumers who were willing, but unable, to pay them,” said Charles Stuart, PwC partner and chief technology, media and communications officer. telecommunications.

For telecommunications companies, which also include Airtel Nigeria AAF.L and Vodacom Tanzania VODA.TZ, the partnership can help retain customers by adding value, said Stuart.

MTN MTNJ.JAfrica’s largest mobile operator with 48.9 million active mobile money users is integrating its mobile money service with its MusicTime app to enable payments, Serigne Dioum, head of digital and fintech, told Reuters of the MTN group.

“We are talking to players who are only music players and we are also talking to players who have a broader reach in music, video and games and who can better position our digital services,” said Dioum of MTN .

Boomplay, which has 60 million monthly active users, has enabled users to pay through mobile platforms such as M-Pesa and Tigo-Pesa in Kenya and Tanzania.

It aims to roll out this option in French-speaking countries, Tosin Sorinola, director of artist and media relations at Boomplay, told Reuters.

Mdundo, which had 8.7 million monthly active users in June, has three telecommunications partnerships in Nigeria and Tanzania, and expects one or two more similar deals before the end of this year, told Reuters Managing Director Martin Nielsen.

“When it comes to payments across Africa, our main goal is to bring telecom operators together… because it is the telecom operators who have this reach and access to people’s pockets,” he said. .

UPDATE 2-Spotify Quarterly Revenue Beat On Paid Users, Advertising Bounce

(Reporting by Nqobile Dludla in Johannesburg and Supantha Mukherjee in Stockholm; editing by Barbara Lewis)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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