Africa’s biggest telecom conglomerate, MTN Group continues to intensify its efforts in the digital space. According to reports, the holdings company has recently wrapped up the acquisition of South African music streaming service, Simfy Africa. This is by far MTN’s loudest effort to become a strong player in the digital world.
MTN CEO Rob Shuter announced at #AfricaCom this morning that MTN has acquired music streaming service Simfy, which will become a key plank of MTN’s digital strategy
— Matthew Reed (@mattreed1) November 13, 2018
Launched in 2012, Simfy Africa is a music streaming service similar to Apple Music and Spotify. Similarly, Simfy works as a subscription based service and allows users to subscribe via multiple ways, like debit cards and telecom recharge.
The service reportedly has over 42 million songs and has signed deals with quite a number of major record labels. And this has MTN completely psyched.
MTN Group’s CEO, Rob Shuter, calls the Simfy, “Africa’s leading music-streaming business.”
Presently, the service is available only in South Africa. But with this acquisition, MTN says it will make Simfy available across Africa and the Middle East, two regions its telecom service operates.
But more importantly, MTN says it will keep Simfy as a spinoff company.
“We are going to run it OTT-like, as a separate business, a separate team and it is not going to be MTN branded,” Shuter said.
This sounds odd, but not completely surprising.
MTN presently operates the MTN Music+ service as part of its Value Added Services (VAS). MTN Music+ allows users stream and download exclusive music on the go. However, the service is restricted to only MTN subscribers. And this represented a huge challenge.
With other services like Boomplay and Spotify witnessing stunning developments and growth, MTN Music+ looks significantly stunted. In fact, MTN, which plans to increase data revenue, was in serious danger of losing out completely.
Although MTN has signed deals with a major record label to attract customers, it would never look competitive as long as it stuck with MTN Music+.
Running Simfy as a separate company is thus a logical move which will allow the Group compete favourably against the other big players in the market. It also sends a lot of signal about a tight competition in that territory. With each service backed by companies with impressive resources, streaming business in Africa is going to witness its strongest competitive period yet.
Meanwhile MTN says its diversification plan will continue as it plans to begin selling 3G enabled feature phones by 2019. This sounds interesting because feature phones are cheap and hugely popular in Africa. But they lack a lot of capabilities especially good internet support. A 3G enabled feature phone would allow the telco reach more people and potentially raise more data revenue.