Day 30: Oral sex

The best thing about a long road trip is that you get to catch up on all the gossip and scandal. Like the story of a CEO and a business colleague who were in Los Angeles on a buying trip. Seeing a sign for “Oral Sex, $15” they could not resists a bargain. Two beautiful woman led them into little booths where they proceeded to talk them through a questionnaire about sex. 15 Minutes later, and highly embarrassed about their mistake the two men zipped up their ego’s and hot tailed it out of there.
A week later when he got home the CEO was in bed with his wife when she burst into a fit of laughter. Reading through the LA Times he had brought with him she came across an article about how two college girls were making a killing by selling their take on oral sex. “Can you believe it” she says to her husband, “men are so gullible!”

So on the topic of turning talk into dollars, Thomas has spent the last couple of years criss crossing the African continent, consulting to MTN. One of the global leaders in the mobile industry, they have transformed economies and small business industries with their mobile payment systems. Thomas explained to me that MTN regularly maintains up to a 30% margin in the markets where it competes. The key to their success is how they serve the market, outperforming others intent on a quick, cheap fix.

As a mobile network provider, the cost of infrastructure is a key shaping element in the business model and fundamentally affects strategy. Their competition usually looks at a map through the eyes of electricity and infrastructure supply. This makes it a lot cheaper to erect base stations, pumping the megawatts of power needed to drive phone reception and transmission straight off the grid. MTN looks at where people are most likely to talk, and erects masts there. In Africa this often means putting a generator with an armed guard next to the mobile phone mast. This has paid off and when South Africa suffered rolling black outs over the past years, MTN was able to turn this redundancy into a real competitive advantage when their masts kept transmitting.

It cannot have been an easy conversation with the CFO when they rolled out their coverage in this highly robust way. Would your CFO have approved such redundancy if your competition are using an established infrastructure at a fraction of the cost? Going it alone is risky and the financial markets would not look kindly upon companies that take long bets against infrastructure partners. But in Africa you have to go to where the market is, not the grid. Like the two ladies in Los Angeles, MTN has shown that risky business is not always what it seems when you turn talk into cash.