There are over 95 million SIM cards registered with Egypt’s three mobile networks: Etisalat Misr, Orange (Mobinil previously), and Vodafone.
With this market’s size and high potential, it was a no-brainer that someone would come along and attend to the digital payment needs of the SIM cards’ owners, especially in a country with many Central Bank (CBE) restraints on moving cash around. These include limits on withdrawing and transferring cash, in addition to the difficulties fintech startups face to get a bank license on their own as they must have a bank as an equal partner.
TPay, the direct carrier billing platform, was the first to capitalize on the opportunity. They created a system that allows mobile phone subscribers to buy digital content such as game subscriptions, videos and ringtones directly via their mobile phone credit/plan instead of using a credit card. Afterwards, Tpay was followed by its competitor DCBEgypt. Now, TPay has bought a 100 percent stake in DCBEgypt for an undisclosed amount. The two companies are expected to finalize the merging of their operational systems by early September, with no suspension or lag in services provided to users and subscribers in the interim.
The done deal
In an exclusive interview with Wamda, Mostafa El Shafey, CEO and founder of DCBEgypt, said: “The technology was the same and the results are the same, so it made absolute sense to hand over all our work and results to the people at Tpay, so I could personally focus on newer and bigger projects.” Following the acquisition, El Shafey will exit the company and will no longer remain on board.
In a press release issued by A15, where TPay is a portfolio company, Sahar Salama, CEO of TPay Mobile, stated: “The acquisition fits our strategic plans to serve more partners and accelerate moving to the next level in TPay’s growth plans.”
El Shafey said: “With something as delicate as mobile payments in Egypt, we have created a seamless transfer operation that will create no hassle or downtime for existing or new users.”
Combining market strengths
DCBEgypt holds many exclusive digital content agreements with local and worldwide video game and e-learning developers and publishers, including Gameloft, Mobitrans, and Ubisoft. According to El Shafey, DCBEgypt has processed over one billion transactions in Egypt since its inception in 2014.
The company was active in the Egyptian market solely. TPay has been no slouch in that department, either. According to the aforementioned press release, it has processed over 2.6 billion transactions across the MENA region since it was established (also in 2014). TPay is active in Algeria, Tunisia, Morocco, Iraq, Palestine, UAE, KSA, Qatar, Pakistan, Bangladesh, and Italy.
In the statement, Salama said: “It is a very exciting moment for TPay to be able to make its first acquisition after only three years of operations, which is a great achievement for any company at this young age.”
A15’s CEO, Fadi Antaki, concurred. He is quoted in the same press release as stating: “To boost [its] growth even more, TPay has moved to acquire the second largest direct billing player in the Egyptian market to become without doubt the number one direct billing company in the region.” Following the merger, TPay turned into the sole direct carrier billing company in Egypt and in the Middle East.
What the future might hold
TPay’s purchase of DCBEgypt represents the first wholesale acquisition by a fintech company in Egypt. The indications are that TPay’s stature and finances are now such that it can buy out its competitors, thereby enhancing its publishers’ portfolios and strengthening its user base, said El Shafey, who remains undecided as to what future projects he will pursue.
He added that fintech is stronger than ever in the MENA region, and pointed to a report by Wamda’s Research Lab. According to the report, fintech startups in the region have raised over $100 million in funding, with the sum expected to more than double by 2020.
Whether in direct carrier billing or in mobile payments in general, A15 now boasts two strong contenders in the fintech sphere, Tpay and Paymob (which recently launched its Accept Payments project). The acquisition of DCBEgypt may mark the beginning of a buying spree, said Salama. According to her, Tpay already has its sights set on other successful startups so as to further expand its operations in MENA.
Feature image via Pexels.