Telkom will rebrand and repurpose the almost 70-year-old Yellow Pages into an online marketplace as part of an effort to capitalise on the growth of e-commerce and grow new revenue streams.
As mobile operators in Africa increase their investments in fintech services, mainly focusing on mobile payments, the fixed-line operator has decided to go in a different direction as a way to earn new revenue streams to offset the continued decline in Telkom’s legacy copper line business.
Fintech refers to technology that seeks to improve and automate the delivery and use of financial services.
In an interview with Business Day Lunga Siyo, CEO of Telkom Business, said the group “has been watching the competition” and decided to “create its own new lane”.
Competitor Vodacom received R1.6bn in revenue from its financial services, with offerings like insurance and mobile money, in the last financial year. MTN this week reported it has registered more than 1-million mobile money users in SA since February.
According to Ecobank, Africa’s fintech market is set to reach $3bn in 2020. Data from Statista shows that in SA the largest fintech segment will be digital payments with a total transaction value of $8.36bn this year.
Born out of the Yellow Pages brand, Yep! Online Marketplace will allow businesses that have normally listed their services, offerings and contact details to sell their wares directly to the public, allowing for buying, selling and bidding between businesses and to consumers.
Over time, the company plans to completely get rid of the old Yellow Pages in favour of the new marketplace, which already has 500,000 businesses listed, Siyo said.
He said this was the first step in Telkom’s plan for fintech and e-commerce investment.
Last year, group CEO Sipho Maseko told Business Day that Telkom is thinking “beyond mobile money”.
Telkom has a financial services strategy that will involve payments and insurance “not just for its own sake, but to find a way in which we can leverage our capacity to bring down some of the barriers, especially for small to medium businesses to be part of the economy”, Maseko said at the time, touting that the operator would launch a suite of financial services by the end of 2019.
Telkom spent R210.6m in August 2019 to buy out minority shareholders’ 35.1% stake in Yellow Pages and now holds 100% of the company. The group spent R18m in capital expenditure to grow the unit in the 12 months to end March 2020.
Yellow Pages contributed R479m in revenue to the group for the year to March 2020, down from R651m previously.
“We’re seeing what we thought would happen in 2025, happening now,” said Siyo, explaining that the shift to online business and increased demand for digital services brought on by lockdowns to stop the spread of Covid-19 accelerated Telkom’s e-commerce plans.
Launched at the end of June, the Yep! platform makes money through the same subscription model traditionally used by Yellow Pages, Siyo said. But now, with trading on the marketplace, Telkom will charge transaction fees as well.
Businesses currently listed on Yellow Pages automatically have profiles on Yep! These profiles will run concurrently until such time as the online Yellow Pages is completely shut down, though Telkom still plans to keep distributing the physical Yellow Pages directory.
He explained that over time the company plans to make money as an aggregator, likely taking advantage of the user base on the platform. For example, if 100,000 of businesses on Yep! need a line of credit, Telkom could approach banks and financial institutions to negotiate better terms or interest rates on their behalf.
In addition to the registered businesses, Yellow Pages on average receives 1-million visitors to its site per month.
The next phase for Telkom’s fintech offering will be a point-of-sale device, which Siyo says is coming soon, and Telkom also plans to facilitate payments for merchants on its platform.
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