Why the MTN – Rocket Internet Deal Worries Me.

When I read about the Rocket – MTN tie up, I thought “WOW!” for a second. Then was a little puzzled as to how a deal between the telco giant and an eCommerce juggernaut made any sense. I slept woke up and my eyes opened literally and figuratively.

I sent out a tweet to which Eghosa responded quite accurately

 

My main worry stems from Net Neutrality or  more accurate the possibly death of it and the implications

Net neutrality (also network neutrality or Internet neutrality) is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, and modes of communication – via Wikipedia

Last year, Pando covered a company, ItsOn that makes it easy for web/mobile companies to pay for the cost of interacting with their application. I did not think it was a good thing then

Under this deal, Rocket Internet is financially aligned with two telecom firms MTN and Millicom (which also owns part of Rocket Internet and which is in turn funded by Kinnevik) that have access to over 200 million subscribers.

So how does his affect competition and consumer choice?

What if for MTN/Millicom subscribers to browse/shop on Jumia does not cost you any bandwidth/money and opening the Konga.com homepage wipes out 50MB? Where do you think people will go shopping? What about Movies/Media?

This no longer becomes a level playing ground.  With this deal, “level don change”.

Of course, I will have to fearfully salute the Rocket guys and their obviously forward thinking backers for blowing up the ecosystem upping the stakes so drastically in less than 3 years on this continent. Can you blame them if they are within the law?

I don’t

The way forward?

Those that are policy experts are better versed on how to allow the ’free market’ operate within the context of avoiding monopolies that harm the consumer.

Interestingly, net neutrality is at an important turn in the US and the result will change EVERYTHING

I’m worried.

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8 thoughts on “Why the MTN – Rocket Internet Deal Worries Me.

  1. As far policy is concerned, don’t expect anything from the Nigerian government. Na EU dey do that kain thing or have you seen AU show any interest in tech policies?

  2. Not enough information on this yet. It’s End of 4th Quarter, which may be part of it. So it’s a puzzle. Millicom was 9 months out from exercising an option to take 50% of AIH, and the ensuing option to take them completely out. This has always been the intent, and the strategy via Kinnevik-who holds the riens on MIllicom and Rocket both.

    The question is, who brings what to the table now? MTN brings a market, and seemingly an interest to follow Millicom/Kinnevik’s strategy of re-branding a telecom as a “digital lifestyle” company. No telecom wants to be a simple spectator in the new-age DICE game (Digital Information Commerce and Entertainment). Millicom brings its new AIH wardrobe & entourage, and a little market share of it’s own, a tenth of MTN, and a very nice showing of recent in Latin America. Yes, there’s even a twin Latin Internet Holding (LIH). It’s easy to make out if we stop here. But, there’s that third-wheel, Rocket.

    What’s Rocket bring to the table? Spare me the German way, pure execution, and market domination spiel. I don’t see much they could build, that hasn’t already been built, or that could be cloned by the new Millicom Digital-which recently sprouted for the post-Rocket era. Would Rocket build a new Jumia, a YourTaxi, HelloAgainFood? Mudi II? Whatever’s needed in by the MTN-Millicom union could be done without a nine-figure premium and or equity share. Our opinion is Rocket was slated for retirement, and probably still is. Sorry Rock, but you’re only one part of the DICE game, that being Commerce. Even that’s incomplete, for instance, financial services. Millicom’s got that, and long experience on the Entertainment. Kinnevik’s got a head-start on the Information with it’s media holdings. Rocket does not have all the DICE.

    Now ask yourself, what each would hope to gain? Rocket’s already on record as wanting it all-but will take as much as they possibly can. MTN probably hopes to gain a huge, or rightful, share of the AIH. Millicom/KInnevik want to avoid MTN starting their own AIH, be it through Rocket -perish the thought – or others.

    You can ask yourself a last question, what does each hope to avoid? I’ll leave that to you. Now watch it all play out.

  3. I have good news and bad news.

    Good news: this is the closest to what could start a conversation around Net Neutrality in Nigeria. It sounded like Greek when we tried discussing this with some earlier, but this brings it home. Policy can now bend towards common sense. Another good news is the fact that the regulator leans towards open access models.

    Bad news: This potential anti-competition behaviour is not known to the Nigerian policy space. It gives MTN/Rocket (I don’t blame them for exploiting this in a green market) the first-comer advantage, and they could do so much damage (MTN holds 47% or almost half of GSM market) that policy will find it hard to catch up.

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