Friday, March 27, 2009

Some comments on the Obopay deal

So the Obopay, Nokia deal was announced this week and everybody with an interest in this space saw it. Nothing has been as big since the Firethorn deal. (see my blog about this). I have also written a blog some time ago comparing the differences between Firethorn and Obopay (see here), and have also highlighted the fact that Qualcomm now have shareholding in both.

This is all history now as Nokia has now emerged as a key player in the space, with a sizable shareholding in Obopay (we think) and a senior Nokia executive now on the board of Obopay. While we all applaud the deal as it raises the visibility of mobile banking (and set a new benchmark for valuations also...), a number of questions must be asked about the transaction?

1. On what basis was the valuation done? One needs to ask this question as it is probable that Obopay was valued in access of $200 million. Seeing that Obopay does not have much of a revenue history it is unlikely that the basis for the valuation was profitability.

2. What is it that Nokia would would want to do with this investment? I have difficulty reconciling this with their handset strategy. Whereas the Navtech deal made a lot of sense, controlling a niche financial services company will not do much. The last thing that clients want is a financial product that only works on one handset.

3. The dynamics of Obopay relative to banks with a telecommunications company as a major shareholder would become interesting. At the same time, mobile operators (while hugely dependant on handset makers) are not the best strategic friends of these companies. Does this mean that Obopay will now "go-it-alone"?

4. Last question: What does Obopay want to do in Africa? And maybe this is the key question and the reason for Nokia investing.

Great to ask these questions. Would be nice if we could also know the answers.

3 comments:

Neil Hinrichsen said...

More on the deal at TechCrunch.

BigChief said...

I think this explains it further:

https://www.obopay.com/consumer/GetBlackBerry.do

I dont think they plan to work on one handset.

The question should really be what is Obopay's strategy and why are the handset manufacturers scrambling to get a piece of the action.

Food for thought?

Business Mobiles said...

The combination of nokia and obopay seems interesting and also very useful for the current system.