Collaboration between startups and mobile operators in emerging markets could unlock mutual benefits for both as well as local economies, and as such both parties should be actively seeking opportunities for partnership, according to the GSM Association (GSMA).
Releasing new research entitled “Building Synergies: How Mobile Operators and Startups Can Partner for Impact in Emerging Markets”, the GSMA argues startups are “vital forces” in the innovation- and wider economies of emerging markets, but are limited in their impact due to a range of market obstacles.
“[T]he majority [of startups]struggle to reach scale. They are often stifled by a dearth of investment capital, lack of payment infrastructure, difficulty to reach unconnected users, a shortage of market insights and limited government support, among other challenges,” the GSMA says.
Similarly, mobile operators in emerging markets also face substantial challenges; despite having achieved an impressive scale and reach, as well as having offering valuable related services, such as mobile money.
“Sustainable competitive advantage in the telecommunications sector is becoming increasingly difficult to achieve. Digital disruption has made it difficult for mobile operators to keep up with the accelerating pace of innovation,” the GSMA says.
As such, the association believes startups and mobile operators should be looking to each other to overcome their respective challenges.
“Mobile operators have reached the scale that startups lack, while startups have the local innovation mobile operators need.”
In particular, the research identifies a number of assets operators have, which could benefit startups. These include a large customer base, financial and physical assets, communication and payment channels, extensive sales and distribution networks, and market expertise.
From the startups’ side, they boast a mobile-centric approach, innovative and high-impact services, new business models, cost efficiency, high customer satisfaction, and socio-economic impact – all things often outside the grasp of established mobile operators. According to the GSMA, startups have the power to help operators remain “relevant”.
“The digital economy creates many opportunities for startups and mobile operators in emerging markets to collaborate for mutual benefit, while also providing citizens with new products and services that have a positive socio-economic impact,” the organisation concludes.
The research ends with some recommendations for unlocking the value of collaboration.
For operators, the organisation says they must first consider what collaboration could bring to their business. Thereafter, steps to take include setting up appropriate channels for collaboration, approaching startups with the right type of language, and making effort to engage with the startup ecosystem at large.
Meanwhile, startups should focus on understanding their own strengths and how they can help operators, find channels to engage with operators, and finally, approach potential partners with the right pitch.