Zimbabwe’s Econet Launches Ride-Hailing Service as Internet Companies Continue to Disrupt Telco Earnings

As internet companies continue to usurp voice and SMS earning from Telecom companies, the latter has intensified efforts to find alternative revenue sources.

Zimbabwe’s Econet Wireless company is the latest company pivoting to alternative services. The South Africa based company has recently launched Vaya Lift, a new ride-hailing service to operate in Zimbabwe.

Econet launching a ride hailing service in a market where they are so dominant in distribution, payments and every other step of the value chain while being virtually shielded from external competition sounds like a pretty quick path to market domination. https://t.co/fjahsyLDTc

— Marcello Schermer (@Marcelloscherme) October 29, 2018

The choice to diversify to ride hailing is quite interesting. Ride hailing is still a nascent industry in Zimbabwe. The existing players in the industry, G-Taxi and Handei, have been around since 2016. However, the absence of popular companies like Uber and Taxify represents plenty of opportunities for Econet to enter and become dominant.

With revenues exceeding $3 billion, Econet is the largest telecom holdings company in Zimbabwe. This also means it has the financial and operational clout to develop a successful ride hailing company in the country.

The company reportedly began testing Vaya Lift since last month and revealed at a launch that the service already has over 450 drivers signed up.

Telco Companies Looking for Alternative Lifelines

Since the digital economy became a huge deal, it has always represented a major threat to the revenues of telecom companies.

Over the last few years, telcos have witnessed consistent reductions in earnings from voice and SMS services. Free services such as Google, Facebook and Whatsapp are disrupting the earnings of telcos and the trend looks unstoppable.

"Strive Masiyiwa's @econetzimbabwe gets into ride-hailing with Vaya Lift" @digestafrica https://t.co/WKbsYhEWDn Another telco gets into the ride-hailing business. pic.twitter.com/2hFLkb5fDp

— Howard Sherman (@hsherman) October 29, 2018

In recent times, telecom companies have begun to target alternative sources of revenues as a new survival tactic.

On its part, Econet is already heavily diversified. Its operations covers telecoms mobile money, IoT, banking, and even television and media services.

Other telecom companies are also diversifying rapidly. Kenya’s Safaricom has been leaning heavily on its M-Pesa mobile money service for the last couple of years. It also recently launched its own Uber-like service, Little Cabs to compete directly with Taxify and Uber in Kenya.

MTN Group, the largest telecom holdings company is also pushing to new domains. Its subsidiaries in several countries have been diversifying earnings from mobile money services for some time now.

MTN also aims to take advantage of the digital economy to grow its data revenues. It announced plans to substantially increase spending on data infrastructure in Nigeria, its largest market. And this plan was not without foresight. The company’s latest earnings report shows that data revenues are growing astronomically.

In sum, the trend of diversification will not end any time soon. As long as data companies continue to grow, telecom companies will need to survive by entering news sectors or churning out new business models.