So I am reading this article on MTN, Millicom and Rocket Internet’s 1:1:1 partnership, and the realities of the things being hidden under corporate lingua are enormous. First time I am seeing an actual Oliver Samwer quote in a Rocket Internet African story. The title says—“ MTN Group Courts Millicon & Rocket Internet to Build Africa’ E-Commerce”. The title playing in my head is “Rocket Internet, MTN,and Millicom finalize Plans to take over Africa”
What are the Implications of this partnership?
Is MTN taking over Rocket Internet’s stake?
From the article, the answer is NO, instead all three companies will be assuming a 33.3 percent stake. “MTN has partnered with Rocket Internet and Millicom International Cellular to develop internet businesses in Africa through Africa Internet Holding (AIH), an exclusive vehicle to develop e-commerce businesses across the continent. MTN, Millicom and Rocket Internet will each become 33.3% shareholders in AIH”
There have been some whispers about the MTN talk but the extent of how it would change everything were not then entirely clear. Now they are clearer.
Millicom and Rocket Internet signed an agreement in August 2012 and the implications were an exit of Rocket Internet from the African ecommerce space giving its stake to Millicom and we have already started seeing the realities of this move with Lukas Zel’s exit from Kaymu, Tunde Kehinde’s recent resignation, and Raphael Afaedor’s soon exit(rumours) from Jumia Nigeria and silent exit of other key players in its other ventures across Africa.
MTN- Nigeria. South Africa and more
MTN has 203.8 million subscribers across its operations in 22 countries in Africa and the Middle East.
A company known for the ruthlessness of its marketing campaigns, large war chest and not so amazing service delivery(according to Nigerian consumers).
South Africa and Nigeria which are Africa’s biggest economies are the two key market’s MTN currently has its biggest footprint in Africa.
The recent introduction of mobile number portability in Nigeria saw MTN lose a good number of its subscribers to other platforms like Etisalat but the figures released by the NCC shows that it still maintains the largest user base in Nigeria
Millicom- Rwanda, Tanzania and more
Millicom has its digital footprints in Latin America and Africa with about 49 million customers. They operate in 15 countries and the strength of Millicom’s offering lies in the way they have creatively used mobile technology in emerging markets.
Rocket Internet is a leading Internet incubator globally. They are known for cloning different versions of existing businesses around the world, with clones for Amazon, eBay and Zappos. They are known for expanding aggressively sometimes closing whole companies in days
What can they do together? Is AIH building a monopoly
Right now, AIH is active in 13 African countries with a hand in a broad spectrum of industries from real estate classifieds to electronics marketplace, food delivery to fashion e-commerce and hotel booking to taxis ordering.
Looking at Nigeria for instance AIH owns;
Jumia: Main competitors/other players- Konga.com
Hellofood: Local Players- Easyappetite, Naijaeats,
Kaymu: Local Players- dealdey.com
Lamudi: Local Players- Tolet, PrivateProperty
Carmido: Local Players Cheki, Kiramu
Easy Taxi: Local Players Tranzit
Jovago: Hotel.ng, Nitestay
Should the local startups just towel in the towel already?
As an entrepreneur watching the events unfold, the implications of what AIH can do in Africa are scary. MTN plus Millicom Plus Rocket almost equals certified domination
Nigeria has so far proven a tough market for Rocket to crack. With every startup venture, they have been met with tough opposition from Nigerian entrepreneurs. In ecommerce for instance, general trends have shown that Konga in Retail and Hotels.ng in Hotel booking, Tolet and other players have not been that easy to run over. This companies also have significant investment and with the the entrepreneurs understanding of the local terrain
The word to local startups is RUN, If you have been sleeping, WAKE UP! If you want to sell, prepare to cash in. Don’t look back, take advantage of any strategic partnerships you can get, there is still sufficient funding/partnership muscle available that you can leverage on, take advantage of it.