Safaricom partners two major media companies to sell digital news subscriptions
in partnership with FLUTTERWAVE & RENSOURCE ENERGY 02.06.2020
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9MOBILE GETS A NEW CEO

9Mobile, the Nigerian telecom company, has appointed Alan Sinfield as its new CEO. Sinfield takes over from Stephane Beuvelet who had served as acting CEO since late 2018. According to his LinkedIn page, Sinfield has worked in a number of telecom companies over the last two decades. Between 2006 and 2019, he served as CEO of Starlink in Qatar, CADSCOMM in Cambodia and Ananda Livemore in Myanmar. Sinfield has a tough task ahead of him. 9Mobile has suffered a decline since 2016 when it was unable to finance a $1.2 billion loan it borrowed from 13 Nigerian banks. This set off a debt crisis that forced major investors such as Mubadala, the UAE fund, and Etisalat to exit the company in 2017. Originally called Etisalat Nigeria, the telco rebranded as 9Mobile following the exits. An utter collapse was prevented when government regulators intervened and instituted a bidding process. 9Mobile was sold in late 2018. During this crisis, 9Mobile's customer base was in free fall. In September 2015, Nigeria’s fourth major telco had 23.5 million subscribers. By March 2020, its customer base had dropped to 12.1m, losing 11.4 million subscribers within five years. It has lost subscribers every month since March 2019 and is far behind Airtel (51.3m subscribers), Nigeria's third major telco. Despite these challenges, 9Mobile’s prospects remain strong. The domestic market is value seeking. Subscribers will switch to networks that offer the best quality. The telco has strong appeal when it comes to quality, notes a 2019 analyst presentation by a rival telco. Official industry data shows 9Mobile has recorded the most number of new subscribers from other telcos every month since June 2018. In February 2020, months after securing a new $230 million loan, 9Mobile said it will invest around $220 million expanding its 4G network. This could shore up its data subscriber base that has plummeted to 7.8 million users. For Sinfield, the struggling telco’s new CEO, the market sentiment about 9Mobile's quality could play a huge role in any transformation of the company.

NEWS DISTRIBUTION
In Kenya, Safaricom has partnered with two major news media companies to sell digital subscriptions. Under the e-newspaper partnership, the telco’s user can subscribe to news publications from these media companies at 20 Kenyan Shillings ($0.19) per week. This is an interesting approach. Once subscribed, Safaricom’s 33.1 million users will not incur separate data charges to read news from these online publishers. This could be an interesting approach for African media companies to sell news subscription. However, it is not clear what percentage of the revenue goes to the media companies or Safaricom.
DIGITAL TAX
Kenya is proposing a new value-added tax on digital marketplaces, Bloomberg reports. These marketplaces include over-the-top (OTT) services like streaming platforms as well as subscription-based news, ride-hailing, web hosting, among many others. According to the report, the proposed tax is separate from a 1.5% digital tax on the value of online transactions that was introduced this year. Both taxes could affect online service providers, both foreign and domestic, granted that they have "significant presence" in the East African country. The conversation on digital tax had been a trending issue among government until the pandemic. France, the UK, Spain, Italy, Cameroon, Algeria and Egypt proposed or implemented taxes on online platforms before February 2020. Nigeria's 2020 Finance Bill provided sweeping powers for the Minister of Finance to tax the country's digital economy. The Organization for Economic Cooperation and Development (OECD) is trying to reach a globally-accepted solution to discourage countries from adopting unilateral measures. So far no agreement has been reached by the 135 negotiating countries. With the pandemic, the number of people working from home has increased. Adoption of online communication and streaming services like Zoom, PlayStation and Netflix has grown, making a positive impact on their revenues. Governments have taken notice, and a few of them are pushing ahead with their unilateral digital tax plans. Kenya is one. Between May and July, a number of countries including Chile, Mexico, Brazil, Paraguay, Indonesia and The Philippines would have implemented their digital tax plans.
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FUNDING OPPORTUNITY
Applications are now open for the Aptive Capital early-stage investment fund. The US VC firm is looking to make $10,000 equity investments in five African startups from countries such as Nigeria, Ghana, Kenya, Egypt, South Africa, and Ethiopia. More details here.
BROADBAND PENETRATION
In Nigeria, the cost of improving broadband penetration is set to drop as a number of states relax taxes on the deployment of fibre optics cables. In just two weeks, six states have crashed Right of Way (RoW) taxes on telecom infrastructure companies. RoW is the state levy collected for every meter of fibre deployed. RoW tax accounts for a significant sum of the cost of laying fibre. It impacts how and where telcos deploy fibre. If the tax is too high, companies will prioritise high-density locations, urban locations over rural areas in the same state. This, in turn, reduces the speed of broadband penetration and affects the consistency of network delivery across the country. Meanwhile, reports by Deloitte, GSMA and the International Telecom Union (ITU) suggests that a 10% increase in broadband penetration in developing countries could increase productivity by up to 4.2% and improve GDP by an average of 2.5%. In 2012, Nigeria’s federal government negotiated an RoW tax of ₦145 ($0.37) per meter for states. After eight years, state governments are finally implementing the plan. In the last two weeks, Ekiti, Imo, Katsina and Plateau states have started implementing the negotiated amount. Two other states, Kaduna and recently Kwara, have crashed RoW to zero and ₦1 ($0.003) respectively. With these levies reduced, mobile telephony could witness a new boom in the country. Surprisingly, Lagos, Nigeria’s commercial capital is yet to reduce RoW taxes. The state government is set to kick off a new Fibre Infrastructure Project (FIP) yet it costs between ₦1,050 ($2.71) and ₦5,000 ($12.90) to lay fibre here. Frank Elenaya, writing for Business Day, says this might affect the implementation of the fibre project.
TECHCABAL LIVE
Join us this Friday, June 5, for an engaging conversation with Bosun Tijani, co-founder and CEO of Co-creation Hub as we discuss the role of ecosystem building in achieving a resilient African tech economy. Tijani has over a decade's experience mediating and propelling innovative growth within Africa by helping launch and scale startups. Whether its hosting innovation hackathons in Lagos and Nairobi or powering design in Kigali, 'CcHub' has led in defining the face of African tech, with a huge role in policy development as well. We'll learn more about what they have in store especially for a world redefined by a pandemic. Register for Friday's session here.
That's it for today,

See you tomorrow
- Abubakar

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