Ethiopia: After Vodacom license win, Mondia Pay in joint-venture talks 

By David Whitehouse
Posted on Tuesday, 1 June 2021 14:51

A 3G prepaid SIM card bought from Ethio-Telecom in Addis Ababa. REUTERS/Tiksa Negeri

Mondia‘s digital payments unit Mondia Pay is in joint-venture talks with the aim of entering Ethiopia, CEO Simon Rahmann tells The Africa Report.

The discussions are with a non-Ethiopian African partner that already has an operating license in the country, Rahmann says in Dubai. The aim is for Mondia Pay to be added to the existing license.

Ethiopia is opening up its telecoms sector, currently controlled by state-owned Ethio Telecom. In May, the government awarded a telecoms licence to a consortium led by Kenya’s Safaricom. A second round of licensing is expected in the coming months.

The country is a “virgin market” with “huge potential” where phone use and connectivity are set to grow fast, Rahmann says. “The Western world hasn’t really penetrated it yet.” Mondia Pay will need to establish a physical presence in Ethiopia, he adds.

Entering Ethiopia would be a “natural extension” of the unit’s partnership with license consortium member Vodacom, Rahmann says. Still, he notes that “it will take time for Vodacom to establish itself in Ethiopia.” The key when entering a new country is to get 100% market coverage to make it cheaper to recruit consumers, he adds.

Parent company Mondia helps companies find customers by providing platforms and content from partners such as Warner Bros and Universal. Mondia Pay, set up in 2017 as an internal division, helps large digital merchants such as Spotify and Deezer to enter new markets by connecting them to consumers through partnerships with telecoms operators.

  • This creates new payment methods as consumers can pay for the services through their phone bills.

M-Pesa, Huawei

In May, Mondia Pay partnered with Vodacom’s M-Pesa to make Mondia’s content available through the Tanzania network. That partnership can “absolutely” be extended to further countries with the technical “heavy lifting” having been done, Rahmann says.

  • Egypt, South Africa, Ghana and Kenya are on a roadmap of countries where the M-Pesa partnership will be extended within the next three to six months, he adds.
  • Kenya is among countries where expansion will require a physical presence.
  • Rahmann is also working to extend Mondia Pay’s partnership with Chinese tech giant Huawei.
  • He expects to enter Tunisia and South Africa with Huawei in the next four to six weeks and has a roadmap of 25 target countries across Africa and the Middle East.

Globally, Mondia Pay provides access to consumers through mobile operators in 60 countries. While parent company Mondia is profitable, the Mondia Pay unit is “on the cusp” of monthly profitability and is likely to achieve this within the next 12 months, Rahmann says.

  • Mondia Pay is targeting breakeven for the financial year from July 2021 to June 2022.
  • The unit’s number of transactions processed is growing by 80% to 100% a year.
  • “The cost base won’t change much” but transactions will keep growing, he says.
  • Expanding to new markets is “not a capital-intensive process. It’s a very scalable business.”

Bottom line

Low costs and wide geographical spread will contain the damage for Mondia Pay if the Ethiopia telecoms liberalisation process stalls.

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