Unlocking profit: how African MNOs can cash in on the booming CPaaS industry without breaking the bank

03 April 2023

African communication platform as a service (CPaaS) company Alchemy provides locally sourced SMS/voice value added services (VAS) enabled by bulk purchases direct through mobile network operators (MNOs). We focus mainly on nought and one-hop direct connections across the sub-Saharan region, although our global network delivers traffic for OTPs.

As the fastest-growing region globally with over 456 million mobile subscribers in 2021, Africa’s sub-Sahara has tremendous potential. And with the sporadic availability of (often low-quality) internet connections in many regions, Alchemy has been able to use SMS to keep information flowing. For example, in case of internet connectivity outages, enterprises can switch to two-way SMS with Alchemy to continue operations.

We recognise the infrastructural OpEx MNOs endure to keep Africa connected, and they deserve income for this underrated expense.

As Kim Buller, CFO, and co-founder, emphasises: “we are here to help MNOs enjoy additional revenue streams derived from their existing customers. Without Alchemy, these business opportunities would be lost to OTT providers like Whatsapp or to grey routes and sim farms, the scourge of honorable security conscious players.
Pricing at a realistic, affordable rate is key – if the cost is too great, grey routes will be utilised, and MNOs will have to invest more heavily in firewalls and cybersecurity.”

Stop re-inventing the wheel

In 2023, companies will send 3.5 trillion messages, and with Alchemy, MNOs stand to benefit financially with no additional effort. We do all the integrations, make a small margin off the top, and pay our MNO partners promptly. Smart MNOs are realising that we are ideal local partners, helping them get the most out of SMS, voice, and data services, without having to conduct the same years of research and associated expense that we did. They reward us by offering competitive pricing models, recouped from the savings made.

Our APIs enable enterprises to send text messages affordably, reliably, and securely. We make money through volume and offering value, with a focus on transparency and mutually beneficial relationships with MNOs to increase business messaging and MNO SMS volumes as we grow, for trackable connections and wholesale rates.
Demand for Alchemy tools exists across private, financial, and public sectors, including large volumes of international traffic for OTP and verification codes for global players like Google, Facebook, Amazon, and PayPal.

Ethics are at the forefront of everything we do, which is why we signed Mobile Ecosystem Forum’s (MEF) Global Code of Conduct.

Fixing leaks

As the CPaaS industry in Africa continues to grow, failures in cooperation between CPaaS companies and MNOs have been cited by industry insiders like the MEF as the key reason why revenues are lost. Indeed, recurring mobile revenues in sub-Saharan Africa could decline as much as 5% over the next five years unless operators change course.

Accordingly, developing relationships with open dialogue between Alchemy and MNOs could be a game-changer. Delivering network coverage, quality of service, prioritised delivery, SMS routing mechanisms for clear billing systems, and revenue-sharing models must all be included in discussions for competitive and profitable pricing plans to be developed and maintained.

This would be a huge win for not only the users - ensuring their loyalty and optimising volumes - but also benefit the continent as a whole, as Malick Dibba CEO and Alchemy co-founder, sees it.

“Our core belief is that everyone should be able to enjoy the benefits of reliable communication, especially those underserved populations in rural areas.”