Triggers:

• Continuous high growth in number of monthly active users (MAU)
  • Target is 18 mill. MAU in June 2022 – 5 mill. MAU in August 2020 at the time of IPO
• Proof that agreements with telecom companies generate subscribers and revenue.
  • At the time of IPO, Mdundo estimated that a minor telecom company could generate around 50.000 subscribers and an annual revenue of around DKK 1 mill., while a larger telecom company in a high-income country could generate up to 100.000 subscribers and an annual revenue of up to DKK 8 mill.
• Acquisition offers from other players in the sector
  • Concurrently with Mdundos geographical expansion (south of Sahara), the growth in number of paying users along with the size of local music catalogs, the opportunity of Mdundo being acquired by e.g. African-based companies or international music streaming services in relation to a consolidation of the Sub-Saharan African market for music streaming is increasing.

Risks:

• Lower than expected revenue
  • Fewer agreements with telecom companies regarding Mdundo subscriptions for telecom customers.
  • Lower than expected ad sales
• Challenged business concept
  • Agreements with the telecom companies do not convert the expected number of subscribers/expected revenue.
  • Continued large scale of illegal music download in Sub-Saharan Africa
• Inferior music catalogs
  • International record companies cancel agreements with Mdundo concerning streaming of their catalogs.
  • The most streamed African artists cannot be connected to Mdundo or move to other services.

Business model
Mdundo’s business model comprises primarily of income from ad sales and secondarily from subscriber payments, thus the model is quite similar to Spotify’s business model. Hence, significant factors for Mdundo’s investment case are the number of users and music streams, ad sales and paying subscribers (primarily from agreements with telecom companies).

From the IPO in August 2020 to October 2021, Mdundo has had a growth of more than 100% in number of users resulting in more than 10 mill. monthly active users (MAU). The defined target at the IPO in August 2020 was to reach 18 mill. in June 2022.

MAU 2015/16 – 2021/22E

A fundamental part of the investment case rests on the number of telecom subscribers that covert to paying users of Mdundo along with the number of agreements with telecom companies. Mdundo has agreements with the telecom companies: Vodacom Tanzania along with Airtel and MTN in Nigeria, whom combined have 125 mill. subscribers. End of fiscal year 2021/22, Mdundo expects to have a total of 4-5 agreements with telecom companies.

The revenue was DKK 2,3 mill. in 2020/21 and is expected to increase to DKK 9 mill. in 2021/22 including annual advertisement agreements.