Quick cash: Money transfers are a popular transaction method in Senegal and the rest of West Africa, with Wari now vying with Orange for market share. Picture: REUTERS
Quick cash: Money transfers are a popular transaction method in Senegal and the rest of West Africa, with Wari now vying with Orange for market share. Picture: REUTERS

Dakar — When Senegalese money transfer firm Wari agreed to buy the local mobile arm of Luxembourg-based Millicom International Cellular in February, it set the stage to challenge Orange’s hold on cellphones in French-speaking West Africa.

Wari plans to list on the West Africa stock exchange (the BRVM) in Ivory Coast this year, after the $129m deal to buy mobile operator Tigo from Millicom is done, said Wari CEO Kabirou Mbodje.

Wari is Senegal’s top money transfer service, a low-cost alternative to Western Union which allows customers to transfer cash and pay bills at petrol stations, banks and even roadside stalls.

The deal will give Wari the capability to transfer money on phones, a rapidly expanding service that is dominated in the region by French company Orange. Orange has nearly
8-million mobile users in Senegal, twice as many as Tigo.

While the deal will only give Wari a telecoms licence in Senegal, it could use it as a starting point for a push for greater competition in other French-speaking countries in West Africa.

"For the last mile, we needed to be able to connect the population. This is where the idea came from of looking for a telecom vehicle, and we found [it] … with Tigo," Mbodje said.

He brushed off a question about Orange. "At the end of the day what’s important is do we offer the best services to the population, do we meet their needs, do we design the service to be the most cost-effective. These are the kind of things we’re thinking about, not competition, and then the public will decide," he said.

An Orange spokesman declined to comment about competition in West Africa.

Mobile money is a sector with deep potential: millions of people in West Africa lack bank accounts and use cash transfers or mobile money for everything from bills to receiving pension payments and remittances from families abroad.

The number of mobile money transaction points in West Africa grew twice as fast in 2015 as in any other region in the world.

Mbodje estimated the company will be worth "a couple of billion dollars" when listed, a process he said he had started.

An official at the BRVM told Reuters it had not yet received an application.

The Tigo deal, announced last month, must still be approved by Senegalese authorities.

The market is changing. You need to be very strategic and understand the terrain

Mbodje has a relevant background for trying to capture some market share from Orange. He studied telecommunications in France and then launched several digital start-ups before creating Wari in Senegal in 2008.

Wari has grown rapidly and now operates in 62 countries including 40 in Africa, with a strong presence in Senegal and its West African neighbours.

Orange, formerly France’s national network France Telecom, has dominated telecoms in Senegal and other former French colonies in Africa for years. It is still expected to stay the market leader for home internet and fixed-line phones which Tigo does not offer.

But experts say it could lose ground in cellphones.

"Orange should be worried," said West Africa IDC analyst Oluwole Babatope.

"The market is changing. You need to be very strategic and understand the terrain." Orange’s mobile market share fell from 56% to 52% in 2016, according to the Senegalese telecoms regulator, while Tigo’s grew from 22% to 26%.

A third player, West African company Expresso, a subsidiary of Sudan’s Sudatel, had also gained ground.

A deputy Orange CEO told Reuters last month that revenue growth across the Middle
East and Africa had halved in 2016 and he expected slow growth in 2017.

Nevertheless, the company is still growing in Africa. Orange completed its rebranding of Bharti Airtel’s mobile business in Burkina Faso last week after buying it in 2016. It also completed an acquisition of Tigo in the Democratic Republic of Congo in 2016.

Reuters

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