Mdundo is a music service similar to e.g. Spotify, but solely focused on the sub-Saharan African market. Mdundo is Danish-led with operational headquarters in Kenya, but developed 100% according to African consumer wants and needs.
Mdundo’s streaming product consists of a music service, optimized for unstable internet connections and low-end smartphones, which can be accessed online via the website www.mdundo.com and via an Android app for mobile phones.
Mdundo has over 23 million active users on both the web and the app. The music service is available to users worldwide, but Mdundo is both active and has its business focus in 15 countries in sub-Saharan Africa, including Kenya, where Mdundo started in 2013.
Mdundo’s business model consists of revenues from advertising and secondarily from subscription payments charged by telecom companies. The model is thus similar to, for example, the business model of Spotify and Asian streaming services, where the user is either advertising-funded through audio commercials or pays an ongoing subscription. Significant factors for Mdundo’s investment case are therefore the number of users, advertising sales and paying subscribers (primarily through agreements with telecom companies). Revenue in 2020/21 was DKK 2.3 million, which increased to DKK 7.2 million in 2021/22 and is expected to increase to a further DKK 13-16 million in 2022/2023, including from annual advertising agreements.
From December 2021 to December 2022, the number of monthly active users (MAU) on Mdundo’s platform increased from 13.3 million to 23.4 million, corresponding to a growth of 76%. The company has a target of more than 50 million users by 2025.
MAU 2015/16 – 2021/22E
An essential part of the investment case is how many telecom subscribers will become paying users of Mdundo and the number of agreements with telecom companies. Mdundo has signed agreements with the telecommunications companies: Vodacom Tanzania, Airtel Nigeria and MTN in Nigeria, Ghana and South Africa, which together have over 185 million subscribers. The partnerships will enable the telecom provider’s customers to subscribe to Mdundo music packages. Mdundo expects subscription-based revenues from these agreements to account for 40% of total revenues within a few years.
Mdundo has signed deals directly with more than 140,000 African artists, which is a competitive advantage as 80% of the music listened to in Africa is African music. In addition, it reduces costs as royalty payments are made directly to the musicians instead of paying royalties to international record labels, for example.
Kapital Partner performs or has within the last 12 months performed corporate finance, market relations, investor relations, Certified Adviser or other advisory activities for the following listed companies: NORD.investments, Biosergen, InterMail, Pila Pharma, Hypefactors, Curasight, Evaxion, Re-Match, Audientes, Mdundo.com, Nexcom.