African Wireless Communications Yearbook

African Wireless Communications Yearbook 2017: Interview

African Wireless Communications Magazine Interviews Avi Kachlon, CEO, FTS

June 2017

What has the Company been up to in Africa over the last Year?

The firm was involved in a number of activities in Africa during 2016, including a major upgrade for one of its long-standing customers: Zimbabwean national fixed line operator TelOne. “TelOne is significantly modernizing its network in order to keep pace with its aggressive growth plans,” says FTS CEO Avi Kachlon. “A key component of this is the upgrade of its supporting systems and FTS has been replacing its years-old billing system with a new one.”

The company also won a new project for what it describes as a “sizeable” African operator with a few million subscribers. Kachlon was unable to reveal further details at the time of writing but expects further information to be released later in 2017.

According to the CEO, FTS’ overall activities in Africa now involve larger and bigger projects than it has previously undertaken in the region.

“We provide a greater number of turnkey, end-to-end solutions for mobile or mobile virtual network operators and enablers.

“We have also expanded our activities. We are not only an independent software vendor with our own solutions, but we are also acting as a systems integrator, bringing in solutions from different vendors including mobile network elements, value added services and other related software, and managing as one project. This is in part due to our experience on the supply side and we’ve found that on the demand side, certain operators want to work with a single operator. This is not an isolated incident – we’re finding a demand for this service in other geographies, too.”

In addition, Kachlon says FTS is also seeing many more opportunities to participate in mobile money and mobile financial services platforms.

“Our latest project involves a mobile money platform as part of a larger billing project, and we are also involved in many standalone mobile money platform opportunities across the continent. In many cases, the requirement is for more than just a mobile app, and we are using FTS technologies, including transaction management and billing. In some cases, network elements are required to deliver a mobile money platform so we are working with other vendors to provide a single solution.

“FTS has also expanded its reach in terms of sales, and we now have many more representatives working in the region. We are working more closely with our parent company Asseco Group’s Nigerian branch, which is assisting us with our marketing and sales efforts on the continent.”

How has the African Wireless Communications Market Adapt and Evolve over the Last Year?

With such varied experiences in Africa, how has FTS seen the continent’s wireless communications market adapt and evolve over the last 12 months? Kachlon identifies two elements here.

“The first is the increasing demand for wireless data services. In other markets worldwide today, OTT messaging has surpassed text messaging, and OTT voice applications are causing traditional voice revenues to decline.

“In Africa however, operators have continued to grow revenues from traditional voice and text, but the growth of OTT messaging platforms is starting to have an impact. African operators are responding by
offering bundles that are tailored to users’ data requirements, such as social media bundles.

“The fast-growing penetration of smartphones in Africa – which up until now was not a problem – is finally starting to have an effect on the market. The more smartphone users there are, the greater the number of OTT applications. Both grow together. So the region’s operators now need to offer different bundles and packages in order to encourage use of mobile data services.

“The second market evolution is that of mobile money and mobile financial services, which are growing exponentially. There are three drivers behind this growth.

“The first is mobile network operators, who have been providing mobile money services in Africa for years.

“The second is the continent’s banks and financial institutions. While Africa has an unbanked population it also has around 100 per cent mobile phone penetration. So banks are utilizing the mobile networks. The banks themselves now feel the need to join the party and so they are creating their own mobile money services.

“Thirdly, a group of different entities, including technology companies and retailers, are serving the refugee and diaspora communities in Europe – Ghanaians, Nigerians and other African communities
based abroad – who want to establish relations including money transfer between countries.”

According to Kachlon, the African MVNO market is not as successful compared to the rest of the world, and there are less than 20 virtual operators across the entire continent (of which the majority are in South Africa).

But he believes that the MVNO market is starting to find its own niche, thanks to the growth of mobile money.

“MVNOs do not support the regulatory environment, nor do MNOs need them: margins and prices are so low anyway that there isn’t much room for MVNOs as well.

“But the banks have no mobile infrastructure of their own which presents them with two opportunities: either to work with MNOs or create their own infrastructure to provide mobile financial services. Banks need this infrastructure so they are becoming a kind of MVNO that provides financial services only.”

Kachlon goes on by saying that mobile money goes beyond simple fund transfers between two individuals.

“Service providers are able to use the mobile money platform to transfer money or airtime, make bill payments (such as utilities), access banking services, loans and micropayments, enable mobile commerce, e-commerce, salary payments, international remittances and much more. A good platform will provide many services beyond straightforward money transfer.

“Revenue sharing schemes are complex business ventures and FTS provides customized tools that foster cooperation between mobile network operators and banks. Even when there are varying business objectives and different mindsets, FTS’ partners and settlements solution ensures that mobile operators can deploy sophisticated revenue sharing and commissioning plans in a variety of ecosystems, defining transaction-based revenues rather than commonly used upfront payments.”

What other Challenges does Kachlon Envisage for MNOs in Africa over the next 12 Months?

“The need to offer different wireless bundles and packages so as to encourage the use of mobile data services is not only an opportunity for the African market, but also a challenge. That’s because it is taking place without voice LTE being widely deployed; indeed, in many markets, it is only at trial stage. Opportunity and challenge go hand-in-hand.

“The same is true for the development of mobile money and mobile financial services which, whilst already starting to experience strong growth, must be underpinned by flexible, scalable and reliable solutions to ensure consumer confidence and continued growth.”

In 2017, Kachlon is hoping and expecting to see more demand for mobile financial services platforms, as well as a requirement for billing systems that enable operators to offer data-first products and plans that respond in real-time to subscriber requirements.

He says FTS also expects to grow its partner network across different countries, and is aiming to add a number of significant new upgrades and projects with new providers over the year.

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