Nigerian Mobile Retailer Loans Minutes of Use
Sustainable business models are a challenge for mobile and Internet service providers in South Asia, Southeast Asia and Africa where many would-be customers are hard to reach and cannot afford to pay too much for service.
As with products such as laundry detergent, mobile minutes of use are sold in bite-sized quantities.
Mobile usage typically is sold on a prepaid basis. So customers limit use when their prepaid cards approach the limit. That will tend to reduce consumption.
But Channel IT, a Nigerian mobile operator, allows customers to borrow about $1 in airtime when their prepaid cards approach spending limits.
Customers pay back $1.10, even if the loan is only for a day. That increases usage dramatically.
The default rate is less than one percent, since customers aren't allowed back on the network until they've repaid the loan.
That is the type of retail pricing innovation other mobile service providers might think about, as the program apparently generates about $2.4 million in annual revenue for Channel IT.